Fund managers that have yet to tap into the wealth channel are now appointing heads of wealth or wholesale and strengthening their wholesale distribution teams, as super funds increasingly pivot towards internalising investment management.
Speaking to InvestorDaily’s sister brand, Money Management, Jack Brown, director at Keegan Adams, said: “Funds who haven’t entered into the wealth channel are hiring heads of wealth or heads of wholesale, and they’re trying to strengthen up their wholesale distribution teams as they find that that is where they can get the most fees in the door and build out that capability.”
“They’re saying, ‘Well, if we’ve lost an institutional mandate and we can’t regain that, we can see that there is less opportunity for us in the institutional market. We then need to start a wealth business or focus on the wealth channel.’”
Earlier this month, Platinum Investment Management announced it lost an institutional mandate worth $958 million, while Perpetual and Magellan have also recently seen sizeable institutional outflows.
While superannuation funds have spent over a decade talking about and acting on internalisation, some have set more serious targets in recent years, with AustralianSuper announcing it is targeting 75 per cent of its assets to be managed in-house by 2030.
Cbus, too, recently said it plans to grow its internal investment portfolio to about 50 per cent over the next three years.
“The shift to a higher level of internalisation has delivered strong results for members, including contributing to an overall saving of investment fee and cost savings of more than $1 billion since 2018,” said Leigh Gavin, head of portfolio strategy, in February.
Commenting on the trend, Chris Hanley, consultant at Michael Page, said that while super funds are increasingly turning away from external fund managers, the wholesale and family office channels are becoming more critical for growth.
“There has also been a big increase in SMAs,” Hanley told InvestorDaily’s sister brand, Money Management.
“We saw a firm that had predominantly been doing equities for years and branched into SMAs as they feel it is a big area for growth, and I know others are looking at it too.”
Another emerging trend among fund managers is a heightened focus on private markets, with firms said to be building out their capabilities in the sector through targeted hiring.
