LAKE SUCCESS, N.Y.,
May 2, 2017 /PRNewswire/
-- Firms with diversified and fully integrated product and
distribution platforms are dominating asset gathering, according to
data released today by Broadridge Financial Solutions, Inc. (NYSE:
BR) via its Fund Distribution Intelligence. In the 12 months ending
March 31, 2017, the leading fully
integrated product and distribution firms - Vanguard and Charles
Schwab - have experienced organic asset growth of over 10 percent
compared to all other firms that had a combined organic growth of 2
percent over the same time period.
![Q1 2017 Net New Assets by Channel](https://mma.prnewswire.com/media/506539/Broadridge_Financial_Infographic.jpg)
"A diversified product mix – index funds, ETFs and actively
managed funds – combined with digital distribution in the form of
robo-advice is a wining hand today, and gaining momentum," said
Frank Polefrone, senior vice
president of Broadridge's data and analytics business. "More and
more firms are following this model of diversification, whether it
is traditional distributors such as Edward
Jones and Raymond James
entering the asset management business, or asset managers such as
Blackrock and T. Rowe Price
establishing robo-advisor platforms. The move to a fully
integrated approach of asset management, distribution and advice
seems to be underway among large financial services firms."
The fastest growing channel on a percentage basis for the last
twelve months ending March 31, 2017
was the direct online channel, formerly referred to as discount
brokerage. Driven by the success of Vanguard's Personal
Advisor Services, and Charles Schwab's Intelligent Portfolios, the
online channel has seen an overall asset increase of 61 percent in
the past year, with ETF and mutual fund growth up 36 percent and 76
percent, respectively. Charles Schwab recently reported that
its two year old Intelligence Portfolios grew to $16 billion, while Vanguard's Personal Advisor
Services reportedly exceeded $50
billion in assets by the end of 2016.
Online Channel Growth Surges
The overall assets for
the online channel today accounts for more than $500 billion. In the first quarter of 2017,
net new asset growth increased by $39
billion, or 8.6 percent. The growth of the online
channel exceeded the growth of the independent and wirehouse
broker/dealer channels on both a percentage and net new dollars
basis in the first quarter of 2017, and was slightly behind the RIA
channel, which had net new assets of $52
billion in the first quarter of 2017. The majority of growth
for both the RIA and online channels has come from passive products
– index funds and ETFs.
The right mix of passive and active products is also impacting
growth in market share across all distribution channels.
Vanguard and Charles Schwab have two thirds of their assets in
passive products, with the remaining third made up of actively
managed mutual funds. This mix of passive/active products for the
overall market is the exact opposite, with one-third passively
managed and two-third actively managed. Vanguard continues to
increase market share across all distribution channels and Charles
Schwab has reported that one-third of its $62 billion ETF assets is from channels outside
of the Charles Schwab platform.
In the first quarters of 2017, overall net new assets for ETFs
increased by 4.3 percent to $2.9
trillion. The largest increase of ETF assets in the first
quarter occurred in the RIA channel, with net new assets of
$38 billion, up 5.4 percent.
The RIA channel is by far and away the largest retail channel for
ETFs with $768 billion. Net new
assets for mutual funds were also up in the RIA market, with net
new fund assets of $15 billion (+1
percent) for total fund assets of $1.75
trillion. The combined growth of funds and ETFs makes
the RIA channel the largest retail channel with combined fund and
ETF assets of $2.5 trillion.
Additional key findings for the RIA and online channel
include:
- Today, more than 53 percent of RIA channel equity fund assets
are passively managed and over the past 12 months it has seen
nearly $37 billion in estimated net
sales go into passive equity products—a figure that leads all
channels
- Investors in the online channel are the most enthusiastic
consumers of passive products: over the last year they've put 92
percent of their net sales into passive products across all asset
classes
- More than half (56 percent) of online channel assets are in
passive products—the first channel to cross that threshold
"Although it may be tempting to sound the death knell for active
products, savvy portfolio managers have been able to keep investors
by doing things that many passive products can't, such as holding
low-liquidity and over-the-counter assets," said Jeff Tjornehoj, Broadridge Director of Fiduciary
and Compliance Research. "Perhaps the best way to compete with
passive is to not compete head-on. Managers in the alternatives
space use futures contracts and derivatives, for example, to build
their portfolios. Advisors in the RIA channel rely heavily on
active managers for their 'alt' allocations, using them for 79
percent of their alternative assets."
Broadridge's Fund Distribution Intelligence comprises the most
complete sales and asset data collection in the industry, creating
transparency into more than $10
trillion of long-term mutual fund and ETF assets across a
majority of mutual fund distributors.
About Broadridge
Broadridge Financial Solutions, Inc. (NYSE: BR) is the leading
provider of investor communications and technology-driven solutions
for broker-dealers, banks, mutual funds and corporate issuers
globally. Broadridge's investor communications, securities
processing and managed services solutions help clients reduce their
capital investments in operations infrastructure, allowing them to
increase their focus on core business activities. With over
50 years of experience, Broadridge's infrastructure underpins proxy
voting services for over 90 percent of public companies and mutual
funds in North America, and
processes more than $5 trillion in
fixed income and equity trades per day. Broadridge employs
approximately 10,000 full-time associates in 16 countries. For more
information about Broadridge, please visit www.broadridge.com.
Media
Contacts:
|
|
Linda
Namias
|
Joe
LoBello
|
Broadridge Financial
Solutions
|
Brainerd
Communicators, Inc.
|
+1
631-254-7711
|
+1
212-986-6667
|
linda.namias@broadridge.com
|
lobello@braincomm.com
|
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SOURCE Broadridge Financial Solutions, Inc.