Fundamental indexing still disliked – IPE survey
EUROPE - Fundamental indexing strategies still remain unpopular as the vast majority of small and medium-sized European institutional investors indicate they are not even considering the instrument, according to the first IPE/Invesco survey.
In the first European Institutional Asset Management Survey jointly conducted by IPE and asset manager Invesco, almost three-quarters of institutional investors say they do not use fundamental indexing strategies, while 24% say they do.
Only around a tenth of respondents said such strategies were under consideration, according to the survey which aims to track trends emerging among small and medium-sized investors in Europe.
The use of structured products has also dropped, as just over a quarter of institutions are using the investments - down from a third in the 2007 survey conducted by Invesco alone.
Significantly though, Central and Easter European (CEE) countries are now seriously involved in structured products, catching up with more traditional users such as French and Nordic investors.
Other findings of the study include there has been a ‘lift-off' in exchange traded fund (ETF) investments and a "dramatic" increase in social responsible investing (SRI) among institutions.
Alongside this trend and the continued strong growth in all alternative asset classes, the study found consultants are more in demand, with over half of respondents now using a consultant.
External managers have also come under scrutiny, as investors indicated performance is the most important selection criterion in external manager selection, followed by risk control and clarity of investment process.
Transparency of investment management fees are also important issues, according to the study.
In terms of investments, more fixed income is delegated to external managers, with the highest proportion of fixed income assets being delegated in the Benelux, Germany, the Nordic countries and Switzerland.
"The larger and smaller investors are allocating substantially more fixed income asset to external managers, but proportionately less of their equity assets," the survey states.
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