EY’s Global Regulated Funds Survey found that more than half of fund managers asked were expecting high levels of growth to come from an increased penetration into current markets, while just over 20% believed it would come from taking existing products into new markets.
Nearly 60% of the managers said they expected actively managed funds to be the main driver of growth, while 80% of rated solutions-based products in their top three drivers of growth.
Global wealth and asset management leader at EY, Mike Lee, said managers are looking to tap into investors’ search for yield in the on-going low interest rate environment, in order to hit the predicted growth rate.
“The regulated fund industry is united in expecting near double digit growth for the next five years,” he said. “It’s clear that managers of regulated funds are feeling pretty bullish.
“Development of solutions-based products and refocusing on core actively managed funds are going to be the big bets over the next five years.”
'Relatively low awareness'
But 60% of managers said they believe retail investors have a “relatively low” awareness and understanding of products, which could hamper growth, given that most managers are targeting a combination of retail and institutional clients.
“Given the importance of retail investors as a customer base, this presents a significant challenge for manager’s growth aspirations, especially for smaller managers who don’t have such large marketing budgets,” said Michael Fergusson, Europe, Middle East, India, and Africa regulated funds leader at EY.
“Managers are hoping that social media will help to develop investor knowledge as well as brand and product awareness among the retail investor audience.
He added that many managers are hoping that social media will help to develop investor knowledge as well as brand and product awareness among the retail investor audience in the next five years.
“Social media may help, but it is not going to solve the entire problem of how engaged and well-informed European retail investors are.”
EY said there were a total of 42 survey respondents from across North America, Europe, Latin America and Asia, representing approximately 30% of total global assets under management in regulated funds.