Retail Client Channel Allocations to Alternatives Have Room to Grow


Retail Client Channel Allocations to Alternatives Have Room to Grow

Increased product development and use of alternative investment platforms can aid distribution

September 2019, BOSTON - This issue of The Cerulli Edge—U.S. Monthly Product Trends Edition analyzes mutual fund and exchange-traded fund (ETF) product trends as of August 2019. This issue also includes special coverage on the keys to distribution success among high-net-worth-focused practices and the alternative product universe.

Highlights from this research:

  • On average, advisors report allocating less than 5% to alternative investments, despite the products being highly necessary given the market environment. Illiquid alternatives are in high demand but are accessible only to sophisticated practices. Meanwhile, liquid alternative product distribution is hampered by the perception of underperformance.
  • Total mutual fund assets declined 1.1% in August, dropping to $15.3 trillion at the close of the month. The vehicle endured net negative flows of $14.0 billion in August, but YTD net flows remain positive at $87.4 billion. After surpassing the $4 trillion mark in July, ETF assets declined 1.5% to just less than $4 trillion during a down August. In addition to sagging equity markets worldwide, ETFs were hindered by rare outflows from the vehicle, losing $1.5 billion during August.
  • More than half (54%) of advisors consider investment management a core part of the value proposition to clients. By 2021, advisors expect to decrease their allocation to mutual funds by 13% and increase their allocations to ETFs and separately managed accounts by 19% and 17%, respectively.


These findings and more are from: The Cerulli Edge—U.S. Monthly Product Trends Edition, September 2019 Issue.


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