How best to communicate to institutional investors - US

Colleagues or peers are considered the most reliable information source by US institutional investors

Key points:

• US institutions prefer targeted and personalised communication and the focus should be on quality rather than an overload of mass-generated emails or cold calls
• Used by 47% of respondents, Morningstar is by far the most popular fund rating provider, in line with all other countries surveyed. However, a further 47% of US institutions do not use fund ratings
• Event attendance is quite high among US institutional investors and for 39% events are the preferred communication form

Attendance of events is quite high among US institutional investors, especially for publisher and industry association events, and events are the preferred communication form for 39% of respondents to our US Institutional Investor Research.

Nonetheless, US institutional investors' reliance on events as a key source of information on managers and strategies is relatively low compared to other information sources. Colleagues or peers are considered the most reliable, followed by asset managers and consultants. Most US respondents (67%) use investment consultants, particularly in the pensions industry.

Strategy/investment process, performance/track record, and investment team are the top three criteria for both stages of the asset manager selection process (creating a shortlist and picking the winning manager). These criteria are more important in stage two, while regulatory issues and reputation of the asset manager drops in importance as selection criteria for picking the winning manager.

Between September 2019 and March 2020, Fundamental Research surveyed institutional investors in the Netherlands, the UK, Switzerland, the US, Germany, and France about their views on global trends, asset manager communication, manager selection, their media consumption habits, and their top asset manager brands.

As a result of the increasing life expectancy coupled with the ongoing low-interest rate environment, longevity is by far the most important trend for US institutional investors. The ongoing low rate environment is perceived as disruptive and respondents cope with this challenge by moving more towards alternative investments and absolute return strategies.

When it comes to asset manager communication, US institutions prefer targeted and personalised communication and the focus should be on quality rather than an overload of mass-generated emails or cold calls. In light of this, monthly communication has the respondents’ preference. In terms of topics, investors are looking for information on market trends, asset allocation/investment strategy, and specific sectors/asset classes such as alternatives and emerging markets. The interest in such topics is consistent with the findings in other countries surveyed.

Other findings from our US Institutional Investor Research include:

• Similar to the European countries surveyed, US institutional investors are planning an increase in ESG/sustainable investing. Nonetheless, it is only a minor criterion for picking the winning manager in the asset manager selection process, suggesting that sustainable investing is not as popular in the US as it is in Europe.
• Used by 47% of respondents, Morningstar is by far the most popular fund rating provider, in line with all other countries surveyed. However, a further 47% of US institutions do not use fund ratings.
• LinkedIn is the social media platform that is most widely used for professional purposes. Institutional investors are using the professional networking site three times more than they did in 2015.

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