Fund houses split on using data from distributors

Fund houses split on using data from distributors

Asset managers are divided about using data from their distributors to influence their investment decisions, despite the Financial Conduct Authority (FCA) recently heralding those firms carrying out analysis in “smarter ways”.

Last month, the regulator published a report which examined how asset managers look at information from their fund distributors, such as financial advisers, to meet investors’ expectations.

“Five firms were investing in smarter ways to analyse data from their distributors to better understand the types of customers that were investing in their funds,” it stated.

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However, fund managers and distributors have questioned whether the accumulation of data actually makes fund houses more intelligent, with some suggesting it might result in trend-following instead.

James Budden, director of marketing and distribution at Baillie Gifford, said it is always necessary for firms to understand their customers and look to “suitably satisfy their needs”.

He stated: “The asset management industry is awash with customer profiling and investor DNA, but whether that makes firms smarter is another matter.”

David Coombs, manager of the Rathbone multi-asset portfolios, also prefers to trust his own instincts rather than use a third party to influence investment decisions.

“There are lots of smart people and there are lots of smart people who sometimes get things wrong, and I’m not smart enough to know when the smart people are wrong. There is too much noise.”

Darius McDermott, managing director of Chelsea Financial Services, said: “Some fund managers follow the trend, but if you are going to follow a trend you have got to have expertise to do it.”

“There is no point in launching a fund you are not going to sell, but trends deal with what has been sold historically rather than in the future. The fund management industry is a nifty industry and some are clever and see a gap in the market.”