Analysts at AB Bernstein have written a report highlighting concerns about the tendency of asset management firms to chase assets under management (AUM) at the expense of profits by offering 'slightly-better-than-passive' solutions at lower costs.
In a report seen by Investment Week, the analysts said the "accelerating" rotation from active to passive funds had tempted active managers to offer smart-beta type strategies at a low fee in order to halt the loss of assets under management (AUM). However, although this use of "slightly-better-than-passive-products" has been driving an increase in AUM, the report said it was destroying profit margins. Inigo Fraser-Jenkins, head of global quantitative strategy and European equity strategy at Bernstein Research, said: "The margin of the industry is already under pressure from the rotat...
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