The regulatory impact on data management and the general financial market environment are the two biggest challenges facing fund buyers, Allianz Global Investors’ Manuela Thies has said.
‘In addition to relevant quantitative and qualitative fund-selection data, more and more regulatory data is required to be monitored,’ she told Citywire Selector.
Thies, who heads up the multi-asset active allocation unit at AllianzGI, said the team has not yet found a data vendor able to provide all relevant information needed.
‘Different client needs in terms of regulation, time frame, investment universe etc. – in both the institutional and retail client space – require a robust yet flexible evaluation and reporting infrastructure.
‘Our company has a competitive advantage due to size: with about 20 people involved in fund selection, excellent access to asset management companies and with AllianzGI being one of the bigger players in the market, as we directly receive information in customized format.’
Thies said the market environment is an equally big challenge, which not only has an impact on the selection team but also portfolio managers.
‘The current low-yield environment and distortions caused by the central banks’ QE policies are another challenge. This obviously does not only have an impact on fund selectors and asset allocators but also on the target funds managers.
‘For several years financial markets have been characterised by low volatility and synchronised performance of different asset classes. Moving into 2018 we maintain our positioning which favors equities, as the world economy entered the year in strong cyclical shape.’
Thies said economic momentum could slow down over the course of the year and the monetary conditions could become less conductive.
‘If and when this happens active management will become even more important in order to distinguish between winners and losers.’
Active v passive
Despite having faith in active management and its abilities, Thies said passive funds are not a threat. She said both have the right to exist in the market, but that neither is blissful.
‘Living customer proximity can also mean covering the one or other investment segment with passive instruments if this is in the customer's best interest. Therefore, there is a place for both active and passive.
‘However, current fund flows show that asset managers have to be clear with their positioning: you either have to be clearly active or clearly passive, everyone in-between is suffering.
'What is often overlooked: even when implementing an investment strategy that is entirely consisting of passive instruments, most clients require ‘active’ support,’ she added.