Some 59% of global institutional investors trust their assets to managers they consider to be ”strategic partners,” according to the Coalition Greenwich Global Institutional Investors Study released May 6.
Moreover, U.S. asset owners typically maintain relationships with four such strategic partners, while institutional investors in other regions usually have two to three strategic partners.
In addition, half of institutional investors globally and about 70% in continental Europe said they prioritize strategic partners when awarding new mandates. Slightly more than half of the institutional investors that prioritize strategic partners provide them with extra time to turn things around during periods of underperformance, including 31% that give strategic partners up to an additional year to improve.
“Managers that achieve the strategic partner role have more opportunities to grow the relationship,” said Mark Buckley, global head of investment management at Crisil Coalition Greenwich, in a news release issued in tandem with the study. “For example, more than 40% of institutions in North America and Europe provide their strategic partners with access to senior decision-makers that are normally off-limits for other asset managers.”
From the perspective of institutional investors, a strategic partner has three important qualities: a manager must take the time to develop a deep understanding of the institution’s goals and challenges; the manager must have the broad capabilities to act on that understanding to provide advice and other forms of added value; and managers must have trusted relationships, not only with the investment team, but across all of the institution’s functional areas.
“Thought leadership plays an important role in these strategic relationships,” Buckley added. “That’s especially the case in the U.S., where institutional investors value thought leadership on specific asset classes and access to the manager’s economists, portfolio managers and other thought leaders.”
Crisil Coalition Greenwich, a unit of S&P Global, is a provider of strategic benchmarking, analytics and insights to the financial services industry.
