[Skip to content]

Sign up for our daily newsletter
The Actuary The magazine of the Institute & Faculty of Actuaries

Fund manager communication critical for investors, study finds

Almost three-quarters of institutional investors believe it is important for them to have direct and regular contact with fund managers, a global study has found.

Investors value communication ©iStock
Investors value communication ©iStock

And this is particularly true at times of underperformance, with nearly eight in 10 investors saying the importance of communication rises when a manager falls below expectations.

Seven in 10 think a proactive client relationship (CRM) is more important at this time, while two-thirds believe communication of specific market events takes on added weight.

CoreData Research, which carried out the study, said that the ability of asset managers to communicate effectively could be the difference between retaining and losing clients.

“However, strong relationships are not built overnight, and companies need to create dialogue during benign times,” said Craig Phillips, CoreData Research head of international.

“This will allow them to call upon those well-trodden channels when a portfolio hits speed bumps. If communication is lacking, there is a higher possibility for the mandate to be terminated sooner.”

The study also found that US investors attach most value to communication when performance slips.

Nearly nine in 10 said that direct, regular contact with the fund manager, and a proactive CRM, take on heightened importance during periods of underperformance.

Similarly, investors in the US value communication related to specific market events more highly than their global counterparts.

However, it was found that a robust investment process and philosophy is the most important factor in the relationship with fund managers, cited by nine in 10 investors.

Investment professionals with a long tenure was the second more important factor mentioned, followed by detailed knowledge of their objectives and portfolios.

"The importance of communication and dialogue is predictable. However, it is telling that these human interaction elements do not take overall priority," Phillips said.

"This suggests institutional investors do not necessarily value this side of their service experience until they need it."

Sign up to our free newsletter here and receive a weekly roundup of news concerning the actuarial profession