Fund selectors moving into more model portfolios
Model portfolios are on the rise, reflecting a heightened, industry-wide focus on the client experience, according to a new report released by Natixis Investment Managers.
The finding stems from the Natixis annual global survey of central gatekeepers – the professional selectors of funds available on their firm’s investment platform – about their portfolio and business strategies and their market outlook for 2021.
According to the survey, eight in 10 fund selectors said they are looking to model portfolios to manage a greater share of discretionary assets and more than half say that moving a larger share of client assets into models is a key objective for their firm in the year ahead.
Model portfolios give clients more consistent experience
Fund selectors say the top benefits of having a model portfolio program are to give clients a more consistent investment experience, give advisors time to spend more time with clients, and provide a more efficient way of implementing unified managed accounts.
As they look to the next 12 to 24 months, 54 per cent plan to add environmental, social and governance (ESG)-focused models.
Active investment strategies will come into play
The potential for greater volatility has fund selectors adding active investment strategies this year. Some 65 per cent of respondents said volatility is their top portfolio risk concerns this year, while 44 per cent pegged inflation as an issue, and 26 per cent said negative interest rates will be a problem this year.
About half of fund selectors expect equity and bond volatility to rise in 2021, while technology, cryptocurrency and the stock and bond markets are in for a correction.
Fund selectors say the following sectors will be most attractive for private equity investment in the next 12 months: healthcare (50 per cent); energy (43 per cent); IT (42 per cent), real estate (19 per cent).