The first three years are the most critical period in a fund’s lifetime for attracting asset flows, according to the MackayWilliams Product Innovation Perspectives report.
While the investment industry may be dedicated to encouraging saving for the long-term, perversely, a fifth of industry assets are invested in funds that are less than five years old.
The analysis revealed that sales tend to tail off rapidly and turn negative within just a couple of years of their heyday. “If you have a winning product today by all means make the most of it – but plan for a scenario where, by 2018, it may well have fallen off the podium. Even in uncertain times, like the post-Brexit vote, asset managers must fight the temptation to freeze budgets and halt product innovations. Maintaining a new product pipeline is vital for companies wanting to protect their future asset gathering potential” says Chris Chancellor, partner, MackayWilliams.
Also highlighted in the report are the most successful companies for overall fund launches and the factors behind their success. Topping the table in Gold and Silver positions, in the latest six monthly update, were Marsh McLennan and the Russell Group where their strength with institutional clients underpinned their high success rate. Commenting on changes in the top ten over the six-month period to 31/03/2016, Chris Chancellor said: “Many of these groups are very close in terms of their launch success rates with relatively small changes leading to notable shifts in rankings. Fidelity is an important beneficiary; in the latest five-year window we have measured it has just three more successful funds than six months ago, but this has propelled it up 12 places.” It’s not a level playing field across all asset classes, though. Scaling the heights of success even to meet the relatively low minimum threshold of €100m is much more difficult to achieve in the mixed asset arena than in fixed income. Fixed income success rates of fund launches are roughly 50:50. Whereas in the highly competitive mixed asset category, 78% of fund launches failed to achieve the €100m grade.
