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Multi-asset funds popularity at risk from ‘tailing off’

Multi-asset funds popularity at risk from ‘tailing off’

Multi-asset funds have been deemed most at risk from a tendency for fund buyer interest in a product to drop off “rapidly” after the first three years of its existence.

Analysis by consultancy MackayWilliams has found sales for bestselling products “tend to tail off rapidly and turn negative within just a couple of years of their heyday”, and added that mixed-asset funds were least likely to have achieved critical mass by this point.

The Europe-wide research said that passing a threshold of $100m (£83m) in assets under management was “much more difficult to achieve” in the “highly competitive” mixed-asset space.

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Some 78 per cent of mixed-asset offerings failed to reach the $100m mark, compared with just 50 per cent for fixed income, according to the study of fund buyers.

The research suggested that a fifth of industry assets were invested in funds that had not reached their five-year anniversary. Chris Chancellor, a partner at MackayWilliams, added: “If you have a winning product today, by all means make the most of it. But plan for a scenario where by 2018 it may well have fallen off the podium.

“Even in uncertain times, like the post-Brexit vote [period], asset managers must fight the temptation to freeze budgets and halt product innovations.”