Thoughts

Helpful Fund Information from Franklin

Posted by Anu Heda on Oct 24, 2013, in Thoughts , tagged with

A streamlined product story is more important than ever. You’ve heard that before and I’ve thought it before. Heck, I mentioned it in a January post. Our recent FA conversations reminded me of that. When listening to FAs articulate a preference for one fund versus another, I realized how much information exists and the effort required for an FA to streamline and communicate that preference to a client.

In that vein, I think Franklin Templeton is onto something. This framework – Strategy, Benefits, Results – covers the basics in a straightforward process that simplifies transferring information from Franklin Templeton to the FA and consequently to the client. “Strategy, Benefits, Results” is worth checking into for any marketer within asset management.

Yield and Mellencamp

Posted by Anu Heda on Oct 23, 2013, in Thoughts

Do you remember the classic Mellencamp album “Nothing Matters and What if it Did” released in 1980? Sure you do. It has that widely-underappreciated song “Ain’t Even Done with the Night” on it. Yes, I’m a big Mellencamp fan and maybe you’re not.

Well that album title kept coming to mind as Mike and I have spoken with dozens of FAs across projects. Nothing Matters and Find Me Yield. That would be the industry’s version of this album. This demand for yield is unwavering and consistent across FA channels and across the country.

Three considerations for asset managers:

  1. In searching for yield, many advisors are open to pretty esoteric investment strategies such as MLPs and non-agency MBS.
  2. FAs are oversaturated with whitepapers related to yield. Metrics, such as duration and credit quality, are more important than whitepapers.
  3. There’s receptivity to vehicles beyond open-end mutual funds. ETFs, closed-end funds, even structured products (just once) came up.

An Additional $0.02: 4 Thoughts on DB Market Share

Posted by Mike McLaughlin on Sep 20, 2013, in Thoughts , tagged with , , ,

Sometimes when we get quoted in the press, I wish that we were able to be more expansive in our thoughts. I understand why that doesn’t happen in a reporter’s article, but that doesn’t mean we can’t do it here.

Last week FundFire wrote a story on the market share decline for the top 10 managers in the US Defined Benefit space (35% in 2012, 32% in 2012). In the story we highlighted one very obvious and one moderately obvious conclusion from Cerulli’s data:

In the data, it’s clear that a lot of the net result is numerically derived from what’s happened at SSgA. That said, the relative market share of the top 10 ex-SSgA has also declined in the 2010-2012 timeframe.

So what if FundFire let us ramble on from there? Here are 4 thoughts we’d have added:

  1. It is somewhat arbitrary to draw the line at 10 firms in considering overall industry dynamics. As we see here, 1-2 firms can significantly influence conclusions.

  2. Plus, the US DB market is not very concentrated to begin with relative to numerous other industries. A 32% share among the top 10 with a severely long tail of assets spread across a large pool of niche providers makes the “top 10” a less meaningful group to focus on.

  3. A 3% decline likely does not indicate any clear trend in industry concentration.

  4. And finally, the very nature of the DB market dictates that institutions will always look for other/better options. As John Garibaldi from JPMorgan notes in the article, “[Institutions are] always looking to hire a specialist in every part of the capital market spectrum.”

Things can change of course, but until M&A runs rampant and/or margins squeeze smaller managers out of the business, I don’t perceive a much higher ceiling for the “top 10”.

Naming a fund…

Posted by Anu Heda on Aug 12, 2013, in Thoughts

As I mentioned in a post last week, we’ve been speaking with advisors around the country. In those discussions, we hear a lot about products (typically funds but also SMAs and annuities). Something striking: how few FAs get a fund’s name right. Many FAs know specific details like effective duration, turnover ratio, or up/down capture ratio. But, they rarely get the name right. Because many product names are so long they either rely on the ticker (Oh, I really appreciate the process behind JSOAX. Very straightforward for strategic income.) or mix up the words (It’s the FundCo High Income [pause] Opportunity Strategy [pause] fund.).

Only one fund was consistently referenced frequently and correctly: PIMCO Total Return Fund. Not surprising considering how frequently the fund makes news.

These experiences (along with some other marketing work ) reminded me of the difficulties in naming a product. You want to use terms familiar to your target. You also don’t want to blend into the others, especially in industries with many choices.

That led me to … contact lens solution. Saline? Yes. Walk into any pharmacy and you’ll see seven or more brands. Below are four I tried recently. The names are “Biotrue®,” “PureMoist®,” “renu® fresh™,” and “OcuTec®.” All 3 companies (B&L, Opti-Free, and Abbott) lean heavily on legal ownership of their names. Two interesting points to me. First, they could all be anything (I swear the wipes we used when the kids were small were “PureMoist.”). Second, there’s no “contact” or “lens” in the name.

Biotrue is the most comfortable.

Anecdotal Finding on FA Research…

Posted by Anu Heda on Aug 07, 2013, in Thoughts

This summer we’ve been fortunate to work on multiple projects involving direct FA research. We’re completing most of this research with telephone calls of 10 – 30 minutes and found one unexpected pattern.

FAs from the Mountain West seem to respond to our requests more frequently than FAs from other parts of the US. As a matter of fact, it seems like this strange quadrilateral  is the most fertile territory for short conversations.

 … [read more]