More than two thirds of fund selectors see active fund management as key to outperforming in the current year, a reflection of its growing importance in uncertain markets, the latest Natixis 2024 Fund Selector Outlook Survey shows.
The survey uncovered a strategic pivot among wealth managers, who over the past decade have largely favoured passively managed index funds. However, 45% of fund selectors attribute the outperformance of passive investments to a decade of artificially low interest rates and minimal inflation, conditions that are changing.
Some 69% of fund selectors believe active fund management is essential for achieving investment outperformance in 2024. This outlook follows a year in which 58% reported that actively managed funds on their platforms outperformed benchmarks. Additionally, 65% anticipate markets will continue to favour active management.
Nearly one out of every two respondents express concern that investors who are overly reliant on passive investments might face challenges in the current year, the study found.
Active ETFs and direct indexing
The survey highlighted a trend towards active Exchange-Traded Funds (ETFs) and direct indexing, indicating that investment professionals seek a nuanced approach in balancing active and passive investment strategies.
The survey reveals that 43% of fund selectors are looking to add more active strategies, with 72% offering semi-transparent ETFs. Of these, 90% plan to either maintain or increase their actively managed ETF offerings. Active ETFs differ from traditional passive ETFs by having a management team actively selecting securities based on specific strategies. These ETFs are gaining traction due to their cost and tax efficiency, convenience in accessing innovative strategies, intraday trading capabilities, and potential for enhanced alpha.
Another finding is that the role of model portfolios in enhancing client confidence has become more pronounced. With 74% of fund selectors acknowledging their effectiveness, these portfolios are increasingly being used to navigate volatile markets and maintain client investments.
The survey was conducted by CoreData Research and completed in December 2023. It included 500 respondents throughout North America, Latin America, the United Kingdom, Continental Europe, Asia, and the Middle East and who collectively are responsible for 34.8 trillion dollars in client assets under management.
Managing the product mix
