Allocation to managed funds shrinks in 2012
The percentage of new client money allocated to managed funds has shrunk once again in 2012, according to a survey released by Investment Trends.
The Investment Trends 2012 Adviser Product and Marketing Needs Report shows 2012 was the third consecutive year in which financial planners have reduced allocation to managed funds, though the decline in flows appears to be bottoming out.
Planners invested 41 per cent of new client flows in managed funds in 2012, down from 46 per cent in 2011 and 52 per cent in 2010.
However, financial planners expect managed fund inflows to settle at 40 per cent by 2015, so the decline might have already settled, according to Investment Trends chief operating officer Eric Blewitt.
The reduction in managed fund allocation comes as excess cash holdings reach record levels, with financial planners each holding around $5.4 million of client money in cash, which would otherwise be invested in growth assets.
"But if we look at the rest of the flows and where they [financial planners expect those to be going] - there is going to be a 30 per cent drop-off in flows into cash by 2015 and direct listed investments will benefit," Blewitt said.
Greater allocation to direct listed investments came amid fee and transparency pressure, with financial planners setting their value proposition as active managers of clients' portfolios, rather than as traditional-style managers, Blewitt added.
The report also ranked Vanguard first in terms of financial planner satisfaction with fund managers, followed by Dimensional, AMP Capital, Colonial First State and MLC.
The Investment Trends report was based on a survey of 822 financial planners in July through to September 2012.
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