Active asset managers are under ever-increasing pressure from passive competitors as investors emphasize cost over performance. To avoid becoming relics of the pre-digital age, active managers must differentiate themselves through timely and engaging digital content marketing.
Whether you manage $1 billion or $1 trillion, to survive in an increasingly competitive and crowded US investment market you need to stand out.
Heightened market volatility contributed to a more than $1 trillion decline in US mutual fund assets in 2018, to $17.7 trillion, according to the Investment Company Institute (ICI). Meanwhile, index mutual funds and exchange-traded funds (ETFs) doubled their market share in a decade to 36 percent, or a combined $6.7 trillion.
From 2009 through 2018, actively managed US equity fund assets dropped by $1.4 trillion, while their passive index fund and ETF equivalents took in $1.6 trillion. Yet over the same period more than 1,000 mutual funds, including index funds, were added in the US, taking the total to 9,599, ICI data show.
As competition intensifies, fees are plummeting. The average charge in 2018 for an equity mutual fund was 55 cents for every $100 invested, a 44 percent slump since 2000, while bond and hybrid funds also saw significant declines, the ICI said.
That’s still dramatically more expensive than the 497 index mutual funds available in the US — whose assets grew five times to $3.3 trillion in the decade through 2018. They charge an average 8 cents for every $100 invested for equity products, according to the ICI, while in the ETF sector, which had $3.4 trillion in 1,988 products at the end of 2018, Fidelity Investments took in almost $1 billion within a month of the August 2018 launch of two funds with zero management fees.
Growth is also concentrating around boutiques and large firms, adding to the pressure on mid-size providers. According to McKinsey, 88 percent of firms with more than $1 trillion in assets, and two-thirds of companies that manage less than $50 billion had positive organic flows in 2017. But in the $300 million to $1 trillion middle ground, 55 percent had net outflows.
These trends show no signs of abating, with fund supermarkets making it ever harder to get in front of retail investors, who account for 95 percent of long-term mutual fund net assets. These platforms are trimming the number of products they carry, which is understandable — who wants to trawl through and compare 9,599 funds?
Faced with such potentially existential threats, good marketing decisions become critical. One of the most effective ways to turn prospects into clients is through tailored digital content marketing, which can generate three times as many leads per dollar spent while costing 62% less than traditional marketing, according to software maker Demand Metric.
Asset managers must seize the opportunity to boost their profiles through bespoke content marketing that addresses the issues, needs, pain points and expectations of existing and potential customers.
The content marketing practitioner has an arsenal of tools to enhance awareness, engagement and enthusiasm before finally triggering a commitment to buy.
Blog posts, e-books, newsletters, online videos, podcasts, infographics and landing pages can be deployed at various stages to eventually convert increased engagement into qualified leads and sales.
The mission gains further impetus if accurate, relevant, entertaining and timely storytelling is amplified by distribution channels such as e-mail and social media, and is further bolstered by exclusive and thought-provoking bylined articles in key media.
A skilled content marketing team can help investment managers punch above their weight by increasing their visibility in a crowded field.
It takes patience and commitment to create a consistent, predictable publishing schedule of stories that resonate with key audiences.
But it isn’t optional.
In the digital-first knowledge economy it’s no longer sufficient for financial institutions to rely on traditional marketing, advertising and public and media relations tactics. Proactively creating compelling storylines that address potential and existing customers’ needs is a strategic imperative for any organization that wants to avoid becoming a relic of the industrial age.