German investment professionals show preference for analytical fund managers

Research shows they are also more likely to buy a fund from managers who they perceive as a partner

Key points:

• German financial intermediaries are more likely to buy a fund from a manager who they perceive as analytical and a partner as opposed to intuitive and a supplier
• German investment professionals’ view on a manager’s ability to generate returns is the main consideration when buying a fund
• Brand recall is the factor that’s the second-most correlated to propensity to buy in the German market

German financial intermediaries are more likely to buy a fund from a manager who they perceive as analytical and a partner as opposed to intuitive and a supplier according to research by Fundamental IQ, the research arm of Fundamental Media.

For the Global Brand Survey, Fundamental Media surveyed 768 financial intermediaries in France, Germany, Italy, Spain and the United Kingdom during the first half of 2021. To understand their perception of asset managers’ brands, we apply our ‘brand equity index’ which was developed in 2016 using a combination of quantitative and qualitative methods along five pillars: brand recall, familiarity, perceived quality, propensity to buy and distinctiveness.

The ‘propensity to buy’ score assesses the likelihood to increase the use of funds provided by that particular asset manager. When correlating this score with those from the other four brand factors, we see that German investment professionals’ view on a manager’s ability to generate returns is the main consideration when buying a fund, as ‘perceived quality’ has the strongest correlation to ‘propensity to buy’. This is in line with the findings in the other markets surveyed. The ‘perceived quality’ is the views of respondents regarding the ability of an asset manager to generate above-average returns. This can be influenced by coordinated sales, marketing and branding activity.

Note: the dots show the positioning of the 35 prompted companies across the two brand factors.

Brand recall is the factor that’s the second-most correlated to propensity to buy in the German market.

Investment professionals were asked to mention which asset management companies they associate with fifteen different asset classes and management styles. Among a total of 2309 mentions, a few local players dominated the brand recall ranking in Germany as they were by far the most mentioned across most asset classes. However, international players were widely associated with those asset classes that financial intermediaries expected to increase their exposure to such as emerging market, global and European equities. A few specialised companies (both local and international) were often mentioned for specific management styles such as passive, smart beta and ESG.

The addition of companies highly recalled in 2018 to this year’s list of prompted companies showed that being front of mind and having expertise in relevant asset classes or management styles are important in Germany, more so than the general familiarity with the brand.

In Germany, companies perceived as more analytical showed a higher ‘propensity to buy’ compared to companies perceived as more intuitive and they were more likely to attract positive comments, especially related to their know-how.

German financial intermediaries also have a preference for asset managers they consider to be more like a partner as opposed to those considered as more like a supplier.

Respondents were asked to choose from opposing values, which were asked in pairs and as opposites (e.g. broad vs targeted; qualitative vs quantitative). A positive correlation with one value is therefore automatically a negative correlation with the opposite value.

The results are similar to 2018 but careful thinking is now more important than tried and tested and personable/corporate has strengthened its correlation to propensity to buy. Across the fourteen values, German investment professionals are relying on companies that are strongly analytical and qualitative, personable and like a partner.

Qualitative comments highlighted that reliable and reputable companies with a strong presence and good communication channels were the most appreciated by German investment professionals. On the other hand, a lack of information, especially in relation to risk, and image and transparency issues were among the things they disliked the most about some asset managers.

Compared to the other markets surveyed, German investment professionals have a much stronger preference for analytical companies, as this value had a high positive correlation with ‘propensity to buy’. The results for the other markets showed no or a very low positive correlation with this value, while the results for the UK and France showed a very low negative correlation; therefore, a minor preference for intuitive companies.