More than eight in ten fund buyers believe that their return assumptions are achievable, but they have also trimmed their long-term rate of return from last year. 

Despite ongoing geopolitical uncertainty and a persistent low return environment, more than eight in ten (82 percent) fund buyers - those responsible for selecting funds included in private banks, insurance, fund-of-funds, and other retail platforms – believe that their return assumptions for 2019 are realistically achievable. This is according to a global survey of 200 buyers fund buyers by Natixis Investment Managers.

However, fund buyers have reduced their long-term rate of return assumptions to an average of 7.7 percent, down from 8.4% in 2018. Against the backdrop of uncertainty and requirements to meet these return expectations, professional fund buyers are showing a preference for active management, said Matthew Shafer, Head of global wholesale at Natixis Investment Managers in a media statement.

Active Management Can Generate Value

«The majority of global fund buyers (62 percent) agree that actively managed investments outperform passive portfolios in the long run. Even in their passive holdings, over half (55 percent) are allocating more to smart beta than they were three years ago,» said Shafer.

«If the active versus passive debate doesn’t look set to disappear, fund buyers are clearly seeing the long term value that can be generated by active management and the access it can grant to a broader range of asset classes, allowing them to diversify their portfolios and mitigate risk,» he added.

Key Highlights Of The Survey

  • Top portfolio risk factors include rising interest rates, volatility and market bubbles
  • Preference for active management to navigate markets, with two thirds who believe actively managed investments will outperform in the long run
  • Bias towards risk assets among fund buyers remains; allocation to alternatives projected to increase
  • Two-thirds say they will increase their allocation to ESG strategies in 2019; more than half contend that there is alpha to be found in ESG investing