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Institutional investors are constantly making tactical portfolio adjustments. But now, investment managers are finding that marketing Equity Strategies to clients based on investment style may not resonate.

Institutional Investors tilt portfolios away from Growth Strategies

eVestment Alliance has found that Institutions have made undergone massive portfolio changes since 2006. One of the most important portfolio changes is the distinct perception of value versus growth strategies.

• From 2006, investment managers reported Growth Strategy equity outflows of $181 billion. This is a decrease of 14% of the category’s managed assets as of year-end 2006.
• Another $8 billion of net outflows from growth strategies occurred in Q1 2011.

Comments from the institutional investors surveyed by eVestment Alliance showed a level of disappointment with growth strategies. What some institutional investors believe is that over the course of market cycles, the performance of growth strategies has not been distinctive versus value approaches.

Marketing Impacts

As clients perceive a lack of differentiation between growth and value strategies, investment managers will need to figure out the best way to respond.

Investment mangers can either step up their marketing and research efforts to better explain why clients should stick with growth strategies or move their product and marketing mix away from equities to other strategies such as liability-driven investing.