Group Co.
Private Equity Investors Seek Alternative Fund Structures for Flexibility and Control
Traders Magazine Online News, March 5, 2019
The February 2019 issue of The Cerulli Edge—U.S. Monthly Product Trends Edition analyzes mutual fund and exchange-traded fund (ETF) product trends as of January 2019. This issue also includes special coverage on institutional investor vehicle use.
Highlights from this research:
• As the private equity space grows, more investors are exploring alternative structures. Benefits of these structures include obtaining lower fees, greater control over investments, more customization, and greater transparency. One of the greatest benefits of alternative structures is control and flexibility. With alternative structures, investors have more input on the timing of their exit strategies.
• While mutual fund assets have not entirely bounced back from the volatility experienced in December, mutual fund products did attract net inflows of $36.6 billion in January, the first time since July 2018. Total ETF assets closed January 2019 just shy of $3.7 trillion, just less than the peak experienced in September 2018. Curiously, net flows only totaled $2.2 billion, with investors seeking out taxable bond products ($16.8 billion) while exiting U.S. equities (-$13.7 billion) and sector equities (-$7.7 billion).
• Within the institutional space, the use of passive investments can vary depending on the client type. For defined contribution (DC) retirement plan clients, collective investment trusts (CITs) are a common investment vehicle choice. Cerulli’s survey of CIT providers reveals that 69% of DC CIT assets under management (AUM) is managed passively. Health and hospital systems use passive investments across their multiple assets pools, particularly in their DC plans and their short-term investing/capital spending pools, where generating strong risk-adjusted returns is less likely to be an investment objective when compared to endowments and foundation pools.
For more information on related topics, visit the following channels:
Comments (0)