EUROPE - Institutional investors are increasingly looking at ready-made fund solutions for their investments rather than go through the process or tendering mandates, Swiss asset manager Pictet has claimed.
Udo von Werne, head of institutional European business at Pictet, claimed in an interview with IPE the asset management industry is changing and there is more demand for fund products because they provide flexibility, easier access and cost benefits.
"We definitely see a trend towards more demand for funds, although it is very different from region to region," he said.
Van Werne added smaller investors funds in particular were interested because less money is needed to reach a higher diversification than with one or two mandates.
"As collective investments, funds can offer cost advantages and if there are no disadvantages or regulatory hurdles many institutional investors prefer funds," continued van Werne.
Fernas Karara, senior sales manager at Pictet, also argued while "funds are very well-regulated, liquid and easy to get rid of, it takes quite a lot of effort to set up a mandate".
Officials noted institutional investors such as pension funds face very strict investment rules in some countries which could not be met by investing in existing funds.
However, special vehicles for such clients are becoming more frequent, as is the case with "Spezialfonds" in Germany.
"Many asset management houses have started to launch funds specifically for institutional investors," van Werne confirmed.
"It is also easier for asset managers to have a few funds rather than 30 or more mandates running parallel."
He said the trend was visible throughout asset classes, not only in emerging markets or other less accessible fields.
"But there are still clients who are seeking an individual solution with a special benchmark and they are still going for a mandate or for a combination of funds," von Werne remarked.
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