Specialist fund groups and niche advisers will trump larger asset managers and consultants in the institutional marketplace of the future, according to the Financial Times.
Investors are expected to turn to boutique managers and absolute return type products in the search for profits, according to a survey of 485 asset managers, institutional funds and other service practitioners conducted by Watson Wyatt.
Alpha had a difficult year in 2007, and for most funds there are question marks about its sustainability, said Roger Urwin, global head of investment consulting at Watson Wyatt. But a typical pension fund wants a return of around 7 or 8%, and alpha will play a significant part in achieving this.
Along with alpha, 58% of respondents said investors will demand greater product transparency and a slowdown of high fund fees.
We think in the next few years we will see the end of these costs spiraling higher, Urwin said. We see institutional funds focusing more on beta, and think they will be less ready to pay high fees for below average results.