As mutual funds and hedge funds increasingly outsource risk management, investors could benefit through lower fees and better transparency, The New York Times reports, citing a PricewaterhouseCoopers survey of more than 150 investment management executives. About 31% said they plan to outsource more business functions over the next two years.
“The whole point [of outsourcing] is economies of scale,” explained Barry Benjamin, head of the investment management practice at PwC. If handled propertly, “the investor should get a higher-quality product for more competitive cost” since outsourcing frees up managers to focus on asset management.
In fact, 40% of respondents said a main reason for outsourcing is to be able to focus on core competencies, and 29% said it is to cut costs.
And in complying with Rule 22c-2, fund companies might be able to learn a great deal about their customers and do a better job of marketing directly to them, PwC said.