European asset managers must not allow the US election or Brexit to distract them from marketplace discontent over fees and poor performance, research house Cerulli Associates has warned.
Barbara Wall, Europe managing director at the firm, says fund managers should "not lose sight of the bigger picture" and the nature of the vehicles they are offering, specifically with regard to price.
The warning comes as the UK's Financial Conduct Authority is set to introduce a single all-in fee that could put more pressure on revenue levels.
An investigation by the regulator found that actively managed funds do not outperform their benchmarks after charges and both funds' investment objectives and fee breakdowns are unclear to investors
Meanwhile, in the aftermath of the market ructions caused by Trump's election, one trend stood out: passive funds fared best.
BlackRock's Ireland-domiciled US equity ETFs attracted US$1bn (€940m) in a matter of days after the election.
Wall says that managers with established funds may be able to leverage the Trump factor in the short term, but that others will need to think twice before entering the fray.
"Funds that can offer something that specifically captures the upside of Trump's plans may be able to maintain higher fees. Trump's presidency means that active management, including stockpicking, will come into its own.
"However, fund providers will need to present a strong case to counter the fact that 97-98% of US and global equity funds have underperformed their benchmarks over 10 years," she says.
Despite poor economic forecasts and markets anticipating more quantitative easing from the ECB, a considerable bulk (€22.3bn) of the asset flows this month moved to euro-denominated money market funds--in sharp contrast to the previous month's redemptions of €5.9bn.
Spanish investors adopted a more bullish approach in October. For much of the year a risk-averse attitude has prevailed, which has resulted in distributors promoting low-quality products such as guaranteed funds.
Having bled more than €26bn during four consecutive years, guaranteed funds made a comeback in 2016--a resurgence that Cerulli hopes will decline as investor confidence grows.
Net inflows of €1.5bn to cross-border funds in October lifted the year-to-date figure to €43bn, higher than industry expectations at the start of the year, but still less than a third of 2015's net inflows.