Investment fund manufacturers need to focus on what makes their product line-ups unique instead of designing more low-cost products, according to several experts who spoke at the 2017 Canadian Funds Summit in Toronto on Thursday.
“There are already too many products that have been launched under the guise of innovation,” said Jason Agaby, former vice president of product development with Toronto-based Dynamic Funds, who spoke at the conference.
He argues that product manufacturers should focus on differentiating one product from another, noting that the overwhelming array of products available has made this space ripe for consolidation.
“The issue of product proliferation is starting to set in,” added Ross Kappele, executive vice president and head of distribution and client management at Toronto-based BMO Global Asset Management, citing the massive expansion in the ETF market. “Everyone is jumping in with additional versions of primarily strategic-beta ETFs without distinguishing their offerings.”
As a result, there needs to be more of a focus on explaining what makes a product unique, not just focusing on the cost, Kappele says.
“To connect with investors, as the ETF market becomes more crowded, providers need to clearly articulate their value proposition to ensure their offers stand out,” Kappele says.
As such, he notes, financial advisors are looking to align themselves with fund companies that can help them understand a product’s distinct selling points.
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