Institutional investors regularly increase communication efforts with their external money managers during times of underperformance, a new survey from CoreData Research shows.
In the July survey of 100 executives at pension funds, endowments, foundations and other global asset pools representing $5.9 trillion in assets, 77% of respondents said the importance of direct, regular contact with fund managers increases during periods of underperformance. Seventy percent said a proactive relationship manager becomes more important, 66% said communication related to specific market-related events becomes more important, and 65% said the managers' robust investment process and philosophy grows in importance.
Direct, regular contact was seen as even more important among U.S. respondents, 87% of whom said it increases in importance during periods of underperformance.
"Our study suggests that when performance hits a rough patch, the ability of asset managers to communicate effectively and regularly with institutional investors could mean the difference between retaining and losing clients," said Craig Phillips, CoreData Research's head of international, in a news release. "The importance of communication and dialogue is predictable. However, it is telling that these human interaction elements do not take overall priority. This suggests institutional investors do not necessarily value this side of their service experience until they need it."
When asked whether they agree with the statement that they want more communication with managers when market events occur that could potentially impact performance, 85% of respondents said they agree.
