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Wednesday, June 08, 2016

These Two Trends Now Dominate Flows On Pershing's FundVest

Reported by Neil Anderson, Managing Editor

Two trends now dominate mutual fund flows on FundVest, Pershing's no transaction fee mutual fund platform. Fundsters, take heed.

Rich Calvario
Director, Product Management & Development
Rich Calvario, director of product management and development in financial solutions at Pershing, confirms that FundVest "recently crossed 7,000 funds." He sat down with MFWire on the sidelines of Pershing's 2016 INSITE conference at the Hyatt Regency Orlando. Pershing has more than $110 billion in assets under custody on FundVest.

One key trend driving FundVest flows, Calvario says, is the shift away from retail share classes to 12b-1-free institutional ones. About 2,000 of the 7,000-plus funds on FundVest are institutional shares.

"In 2015, 96 percent of the net flows in FundVest went to institutional share classes," Calvario says. "We fully expect that in 2016 to be above 100 percent," with retail share classes suffering net outflows on the platform.

"We have 800 asset manager partners. Now they're coming to us, because the wholesaler out in the field is saying, 'Our competitors' institutional shares are available but ours aren't,'" Calvario adds. "We encourage our asset manager partners to add their institutional share class to our NTF platform."

Another key factor in flows on the platform is Pershing's FundVest 200 select list of top mutual funds. Pershing launched that list two years ago, powered independently by the manager research group of BNY Mellon (Pershing's parent) and Lockwood Advisors (also part of the BNY Mellon family). Pershing simply provides the up-to-date FundVest list to Lockwood and BNY Mellon manager research, and then Lockwood and BNY Mellon manager research whittle that down to a few funds across 40 categories. The list, which is updated quarterly, currently features 215 mutual funds.

"It's had a very nice impact. We expected our clients [broker-dealers and RIAs] to like it," Calvario says. "We're giving it away free."

Calvario says that, prior to the debut of the list two years ago, the funds that would end up on it drew about 12 percent of net flows on all of FundVest. Last year, FundVest 200 funds brought in 30 percent of net flows on FundVest. And for the 12 months ending on May 31, 2016, Calvario says, FundVest 200 funds brought in 55 percent of net flows on FundVest, which means the other 6,800-plus funds on FundVest split the remaining 45 percent of net flows. 

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