PALM DESERT, Calif.—Developing products to meet intermediary demands is one challenge but a whole new can of worms is opened once that product hits the market.
At the 2013 Mutual Funds and Investment Management Conference here this morning, a group of industry participants offered their views on how to meet the demands for new products and keep them relevant among distributors and end users.
Michael Perry, Managing Director, Wealth Management, UBS, said investors are “hung over’ from the financial crisis and don’t want to lose any more money in the market. Currently, they’re looking to park their assets in emerging market equities, alternative and low volatility strategies, he said.
Thomas Schreier, Vice Chairman, Wealth Management, Nuveen Investments, offered that today’s fund operators may not be positioning their products well for the next generation of young investors and may “require some level of creativity from a product perspective.”
Schreier thinks that fund firms will do well to develop products that can be delivered across multiple platforms such as closed-end funds, separately managed accounts and Undertakings for Collective Investment in Transferable Securities (UCITS). “You don’t want to develop strategies that can only fit in one package,” he said.
Whatever products firms end up developing, Perry said it’s important to make sure that they do what they’re advertised to do. For instance, will your absolute return funds lose money along with other more traditional funds during market downturns?
Schreier said at pre and post-launch his firm spends a lot of time educating its sale force on their products so they can, in turn, educate advisors on what the funds can and can’t do.
Joseph Carrier, Chief Risk Officer, Legg Mason, said during the heyday of the mutual fund industry, “folks used to sit in labs and pump out products.” ‘Today, product cycles are slower because of regulatory issues and market issues. Distributors may not have space on their shelves or already have other similar products. We tend to be better listeners now.”
He advised fund firms to “think in 3-D” in terms of how the products may fit on a distributor’s platform and in an investor’s portfolio. “Where do you want products to go over time?” he asked?