Sustained volatility with more frequent and sharp price dislocations, lower expectations on growth and financial returns, compressed yields, and fewer sources of income are creating tough conditions for investment providers globally, SI said. The growing complexity of funds, use of derivatives and their associated risks, and the need to protect investors have also brought on a wave of regulatory initiatives that further tap investment company resources.
As discussed in Strategic Insight’s latest report, Global Fund Review – Rising to the Challenge, investment strategies such as hedge-fund style alternatives offering enhanced management of volatility, reasonable returns and income, and better downside protection are gaining traction within regulated fund structures. But the marketing success of these strategies need to considered in the context of regulatory developments. The possibility of carving out UCITS by complexity and risk of product could affect alternative strategies, absolute return funds, and synthetic exchange-traded products.
Mutual funds remain the primary vehicle for the public’s savings an investment needs, but the complexity of managing and distributing funds continues to rise.