PIMCO and the Vanguard Group received the highest favorable ratings from prospective institutional investors among leading asset managers, according to a new study released by Cogent Research.
In the report, over two-thirds of prospects in both the pension and non-profit markets rated PIMCO “very” or “extremely favorably,” and more than six in ten viewed Vanguard in a similar light.
“There are so many providers out there that an institutional investor can choose from, you really need to stand out in the marketplace—at least to make it to the first consideration step,” Cogent managing director Tony Ferreira told Money Management Executive.
The report examined the attitudes and behaviors of institutional investors, including asset manager preferences, based on a survey among a nationally representative sample of 650 pension and non-profit institutions with a minimum of $20 million in assets.
Wellington Management Company was the only other firm to break the 50% mark in terms of strong favorability among pension prospects. In the non-profit market, Grantham, Mayo, Van Otterloo and LSV Asset Management rival Vanguard, with 60% and 57% favorability, respectively.
Ferreira said that a number of factors were important for a firm to develop favorable impressions within the industry. These factors include asserting thought leadership in the industry and providing continuous access to a firm’s portfolio managers.
Asserting thought leadership, he said, is more than just issuing periodical thought papers. A firm needs to take some interesting, as well as successful, stances on what is going on in the investing world. This includes launching unique products and strategies and regularly and clearly communicating the firm’s uniqueness.
“You need to have a leading edge, come up with ideas that may not be popular now, but are valuable in the future,” Ferreira said.
Meanwhile, continuous access to talent, Ferreira said, involves regular in-person meetings, conference calls, webinars, and any other vehicles that would put investor talent in front of client prospects.
The key, though, is not to overpromise too much during all of these discussions, according to Ferreira. He admitted this involves a tough balance between clearly articulating one’s viewpoints and advantages—and presenting things that can’t be delivered. Managers need to be clear about their mandates, he said, because they can’t be a fit for everybody.
Tommy Fernandez writes for Money Management Executive.