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Friday, March 03, 2017

2016: The Beginning of the End?

News summary by MFWire's editors

For the first time since 2009, mutual fund cuts outpaced fund launches in 2016.

Cindy Zarker
FUSE Research Network
Relationship Manager
From 2010 to 2015, fund launches rebounded and outpaced rationalizations every year, but, according to Cindy Zarker, director of relationship development at Fuse, we shouldn't expect the same rebound this time around.

"This is different now. This is more of a fundamental change in terms of managers not having the luxury to have product lines cluttered with products that aren't selling," Zarker tells MFWire.

Last year, 316 funds were launched and 427 funds were rationalized, marking the least fund launches and the highest number of rationalizations since 2009, according to Product Management & Development 2016, a report published by Fuse last month.

ETF rationalization also saw its highest level ever, with 118 ETFs rationalized last year. However, 244 ETFs were launched, making 2016 the third consecutive year where over 200 ETFs were launched.

Given the increase in rationalization levels, Zarker notes that it's interesting to see where asset managers are focusing product development efforts.

"Clearly, firms still see an opportunity in alts," says Zarker.

When asked about plans for new products in the next twelve months, 70 percent of asset managers reported a focus on alts, up from 52 percent in 2015.

On the flip side, only 30 percent of asset managers have plans to launch smart beta products, down from almost 50 percent in 2015. Zarker explains that this isn't due to a decrease in popularity in the strategy, though. Rather, all the products developed over the last few years are now trying to gain traction.

Despite the increase in rationalization levels in 2016, Zarker says that product development still plays an important role in the growth of asset managers.

"We know that new products do capture flows. Itís an important piece of a manager's growth," explains Zarker.  

Edited by: Katy Golvala


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