Principals of Product

NICSA members gained insight into emerging product trends – and how investment managers and distributors are working together to support them — during a breakout session at NICSA’s Strategic Leadership Forum in April.

Jack Tierney, Head of Investment Policy and Governance, Invesco Unit Trusts, moderated the panel, which included leaders from Columbia Threadneedle Investments, Delta Data, and Eaton Vance Distributors.

Product Trends

There’s a lot of coverage in the industry on product growth and scalability of fund companies, particularly as it concerns the ability to be relevant to distributors and advisors,” Tierney said. “Many fund companies have greatly increased their offerings over the last few years, either through organic growth or through merger and acquisition activity.”

Scott Brady, Head of US Product Development and Strategy, Columbia Threadneedle Investments, said when it comes to product growth and development, “we don’t need more stuff, we need the right stuff.”

“That’s the lens that we have applied, not only our existing product line, but anything we foresee bringing forward in the future, either through acquisitions or through things that we develop organically,” Brady said. “Make sure you know what it is that you’re solving and who it is you’re solving for.”

From the perspective of a service provider, Whitfield Athey, Chief Executive Officer, Delta Data, suggests that the asset managers who complete acquisitions successfully do so through lots of preparation — and the same can be said for products.

“Those who effectively roll out products have prepared a pipeline in which they can get those products out the door for the least amount of money in the quickest time possible,” he said. “These people are the ones who prepare for complexity before it hits – and it always hits in this industry.”

Innovative Strategies

Tierney said when he first started a business selling mutual funds, the concept of the mutual fund family was important — and he questioned whether that concept is viable anymore.

Elaine Sullivan, Chief Marketing Officer, Eaton Vance Distributors, said there is still value to that concept.

“From a fund family standpoint, we’re not looking for people to come in and create a portfolio all of Eaton Vance products,” she said. “But we are trying to position ourselves as a firm that advisors can partner with to solve a range of problems using multiple vehicles and pricing packages, ensuring we are a trusted partner to advisors and their best clients.”

Brady touched on the ongoing active versus passive debate from his firm’s perspective. “For our shop, in particular, it’s not a question of active or passive, it’s the right mix of active and passive,” he said.

Sullivan agreed, adding that at Eaton Vance, active strategies are used to drive incremental client value. “To my earlier point, if somebody did want to build an entire portfolio around Eaton Vance strategies, they certainly could using core investment vehicles and pulling in small cap or floating rate strategies where you don’t necessarily want to be in an index or a passive strategy,” she said.

Sustainable Investing

The panel then focused on ESGs. From a technology viewpoint, Athey said the industry needs to look out for what consumers will soon define as the accepted model of ESG competence.

“Somebody is going to brand it — I would liken it to how car dealers have always had VIN searches and the power to know which cars were bad and which ones weren’t,” he said. “Then Carfax turned the industry on its head, and now Carfax is demanded in any transaction.”

He said that as soon as clients determine their preferred methodology, the industry will need to follow suit. “We need to embrace it, because the consumers are going to adopt what they want. That methodology has not emerged yet, but I see it emerging in the next two or three years.”


Note: Although the observations contained in this work represent the best thoughts of the individuals comprising the NICSA panel, they do not necessarily reflect the views of NICSA or any of its member organizations. Matters addressed in this work may touch upon legal or regulatory matters, however nothing herein is intended to be or should be construed as legal advice. You should contact your own counsel in order to obtain legal advice regarding these or any other matters.

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