Internal research teams as important as ever, says AXA
Exchange traded funds, direct equities, direct fixed interest and structured products are some of the areas AXA’s research team is keeping an eye on at the moment, according to AXA general manager of technical research Robert Thomas.
Thomas said that while there could be negativity around any product, this only illustrated the importance of internal research teams that would have a greater focus on how products were used within a portfolio.
Thomas added that while AXA made use of external research, it was not the “be-all-and-end-all of an advice business”.
“The licensee is the one who is ultimately responsible for the advice its advisers provide,” Thomas said.
“The knowledge that the adviser has of his or her client is far superior to that of the research house. It is that knowledge and the guidelines on how a product is used that are far more important than whether a product has an X number of stars or whatever it might be. That’s where internal research teams are significantly important.”
Thomas said, at this stage, AXA did not need to boost its research team in light of the changing investment universe, although he said there was a possibility of investing in the team, its resources and processes should current trends in the market lead to greater complexity. He said exchange traded funds was one such trend, which at the moment was a fairly simple segment to manage.
“But if that segment rose in terms of the number and complexity, which people are envisaging, then maybe that’s an area we need to look at,” he said. “We may have to put different skills or time towards that sector.”
Thomas said the key investment areas going forward included direct equities and direct fixed interest, where there was a desire from investors for more transparency.
“That’s in sync with the [self-managed super fund] growth, which is about transparency over cost and about being in control,” he said. “We do a fair bit in that area but we will probably have to beef that area up a little.”
He added that the research team would also keep an eye on structured products, which he said are a valid solution for certain investors.
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