Being able to find new and innovative managers in formats open to your clients which also don't dull their competitive edge will prove a headache for selectors in 2018.
That is according to Olivier Couvreur, head of manager research at ABN Amro Investment Solutions.
Speaking to Citywire Selector, Couvreur said finding managers that are not available to clients in a regular fashion and on-boarding them onto the group’s platform of segregated accounts is proving time consuming.
'It's taking up a lot of time and it's going to be very intense in the coming years. We started doing it 10 years ago but the focus on it has been much more present over the last three or four years.’
The challenge is in maintaining the manager’s unique selling proposition under the relevant regulatory framework in order to make it available to clients.
Meanwhile, selectors are under increasing pressure to prove their worth against an intensifying regulatory backdrop. This is while passives also being to eat up market share.
‘We stay relevant through performance,' he said. 'Addressing the issue has been very important for us and there has been pressure not only from the clients but also the regulators.
‘We have spent a lot of time performing back testing and proving the outcome of our recommendation to clients to the regulators.’
Test results have led the team to drop coverage on certain asset classes but, in most cases, the selectors have been able to prove that active management can outperform.
The team has had to drop certain sector funds and real estate, as well as particular segments in US equities.
‘An example of one that was dropped is for certain styles in US equities, where we are now using a mix between passive and active but it's not systematic.’