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Portfolio > Asset Managers

Global stocks nab one-third of product development plans

By Warren S. Hersch

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Asset managers plan to allocate nearly one-third of their new product development plans to international and global stocks over the next 12 months, new research shows.

Cerulli Associates, Boston, discloses this finding in a new report, “Retail Products and Strategies 2012: Formulating a Product Line Strategy in a New Era.” In its fifth iteration, the annual report analyzes strategy and innovation for U.S. investment products. The survey explores investment strategies and product development in respect to mutual funds, closed-end funds, retirement income products, target-date and target-risk funds and 529 plans.

The report observes that over the next 12 months, asset managers plan for 31 percent of their product development to be in international/global asset classes, up from 19 percent in 2011.

By comparison, asset managers intend to devote less product development to taxable bonds (24 percent in 2012 versus 23 percent in 2011), balanced/asset allocation (17 vs. 11 percent), U.S. socks (12 percent vs. 13%), alternatives (11 percent vs. 26 percent), other (3 percent vs. 4 percent) and municipal bonds (1 percent vs. 4 percent).

The report also shows that 44 percent of surveyed asset managers plan to build passive investment management capabilities in-house. That’s because passive management capabilities are less complex to manage than active management capabilities.

The report adds that an additional 22 percent of asset managers plan to buy passive investment management capabilities. And one-third (33 percent) of respondents intend to hire a sub-advisor to oversee passive investment management strategies.

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