Multi asset solutions are set to challenge passive investment vehicles that follow indices as well as actively managed products by 2019 as investment solutions for retail investors.
Research by US investment bank and wealth manager Citi, finds that unconstrained long strategies will eclipse passive benchmark fund growth to become the second largest asset pool in the publicly traded fund space by 2019.
Passive benchmark assets under management (AUM), across separately managed accounts, mutual funds and exchange-traded funds (ETFs), is seen rising from an estimated $6.7 trillion (€6 trillion) in 2014 to $10.7 trillion by the end of 2019. Actively managed long only benchmark funds will continue as the largest asset pool, but proportionately these strategies are losing market share, according to the Citi report.
Research also shows that smart beta products are growing in popularity, as investors seek to move away from following market capitalisation indices. Smart beta AUM and actively managed ETFs is projected to rise from $265 billion in 2014 to $1.1 trillion by the end of 2019 - more than a four-fold increase- making this the fastest growing product in the asset management industry, Citi finds.
Liquid alternatives are the final product set targeted for inclusion in the new multi-asset class solutions. These products allow investors to access strategies that have traditionally only been available to qualified purchasers in privately traded funds. There are now a set of offerings that can provide retail investors’ access to alternatives exposure to help expand their asset class diversification.
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