With no “blue oceans” left, asset managers are banking on distribution

With truly untapped markets becoming nigh impossible to find, asset managers are instead focusing heavily on expanding their product distribution pipelines and developing new investment vehicles.

That’s according to the latest Cerulli Edge—US Managed Accounts Edition research report, which showed 71 percent of asset managers see broadening product distribution to new segments and channels as their top priority for 2024.

While asset managers have historically been able to max out their distribution potential through traditional segments and channels, the competitive global market has made it more challenging than ever to employ a "blue ocean strategy," which targets new markets with limited competition.

Against that backdrop, asset management firms are increasingly considering new distribution avenues. While they used to hardly give RIAs a second thought, Cerulli says the rise of RIA aggregator firms have made them a prime target for asset managers to integrate into their key account distribution strategies, similar to legacy broker/dealers.

Apart from distribution efforts, 54 percent of asset managers are focused on creating new investment vehicles, while 50 percent aim to enhance their ability to offer personalized investment strategies.

The research indicates that active ETFs – which made up 73 percent of new launches last year, and have sopped up $136 billion in assets so far in 2024 –  are the main priority for asset managers, with 79 percent saying they’re looking to create new active exchange-traded funds as part of their 2024 product initiatives.

Cerulli’s report also found significant interest in both model-delivered (54 percent) and manager-traded (46 percent) separate accounts.

“These results highlight the future path of traditional asset managers,” Scott Smith, director at Cerulli, said in a statement. “While they were built on the backs of mutual funds, their future success depends on transforming their organizations to support different structures and meet the demands of the market,”

 “Moving forward, Cerulli expects managers to be increasingly open to using their intellectual capital in nearly any way a wealth management platform can consume it. Finding emerging opportunities will be an increasingly important aspect of the key accounts staff,” he concluded.