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Trends transforming fund management in the U.S.

America’s fund industry is undergoing rapid transformation, driven by investor preferences for sustainable assets, novel technologies, and active management strategies, explained winners of the 2020 Refinitiv Lipper Fund Awards for the U.S.


  1. Interest in investments that incorporate environmental, social and governance (ESG) is surging. However, the industry is in a nascent stage, with much room to grow and mature.
  2. Use of data and new technology is unearthing insights, which otherwise would remain unknown, and is speeding up the investment decision-making process.
  3. In an era of low interest rates, an active approach to managing bond funds is helping to drive alpha, while also delivering beta.

Recognized for superior performance on a risk-adjusted basis, the Refinitiv Lipper Fund Awards are the standard with which investors can robustly assess a fund and its potential returns. Recipients are the best performers in their respective fields — firms that are acutely aware of the developments shaping the financial markets and wider economy.

“Refinitiv Lipper Fund Awards signal to the marketplace the funds and fund families that have done a great job for their clients,” enthused John Streur, President and CEO, Calvert Research and Management. “All share owners want competitive returns, and that’s what these awards are all about.”

© Matt Greenslade

At the 2020 Refinitiv Lipper Fund Awards ceremony for the U.S., recipients acknowledged three trends driving superior fund performance. According to leaders from award-winning firms, these not only reflect the pressing needs of clients, they also indicate how businesses operate internally and manage their respective funds.

Suring ESG interest, with much room to grow and mature

According to Streur, 2019 was a tipping point for ESG investing. But rather than reaching maturity, he asserted, the investment approach merely commenced a long and prosperous journey.

“Today we are able to bring the benefits of sustainable investing together with the best of fundamental and quantitative investments to drive solid investment returns to our clients,” said Streur in an interview with InvestmentNews. “This is proof that we can drive solid investment results and deliver the promise of sustainable investing.”

By 2025, ESG-mandated assets are predicted to make up half of all managed assets in the U.S.[i], amounting to $34.5 billion. Yet despite burgeoning interest, many investors are unsure what ESG investing involves, and how these elements drive superior fund performance.

“The way a company deals with climate change and social issues impact a company’s brand, market perception, sales, and certainly their financial returns,” Streur explained. “These are real financial issues, but they are new — they’re just happening — and so clients need and want education. Advisors are working hard to keep up. But a lot more needs to be done.”

According to Jim Caron, Global Fixed Income Portfolio Manager at Morgan Stanley Investment Management, the governance part of ESG is particularly important when assessing opportunities. Good corporate governance ensures transparency and accountability, and prevents malpractices. A well-run company that exerts good governance principles is less susceptible to a wide range of risks. “Companies with good governance tend to be good bonds to hold,” quipped Caron.

The environmental and social elements of ESG correlate to key economic drivers, such as robust policy making, strong political systems, human rights and social stability. Countries that exert these qualities typically offer more attractive bonds to investors at both the sovereign and corporate levels, Caron added.

Unprecedented insights, novel investor experiences

Increasingly, data and technology is influencing the investment decision-making process. Using both conventional and alternative datasets, fund managers are leveraging sophisticated analytics tools and artificial intelligence to uncover new investment opportunities while revealing hidden risks. These new technologies are also enabling firms to conduct tasks that once took months to perform within seconds.

“Data and technology bring a lot of information to portfolio managers and research analysts,” explained Streur. “Not just fundamental financial results, but information about how a company is managing its operations, how it is treating its people, and how it is impacting society and the environment.”

Aside from providing deeper insights, technology is also transforming investor experiences. T. Rowe Price is one of several managers to service investors through robo-advisors. Offering multiple model portfolios that meet a wide range of goals, the firm uses chatbots to understand the preferences of investors, and directs them to appropriate T. Rowe Price funds[ii].

Active management strategies

T. Rowe Price’s robo-advisory service is actively managed. The firm’s fund managers capitalize on tactical opportunities as they arise. The service also meets growing interest from millennials for online only investment products. According to Andrew Jacobs van Merlen, Portfolio Manager the firm’s digital-first, active management approach is a key differentiator when compared to rival fund products, which are usually passive.

Increasingly, active strategies are being applied to passive funds like those in the bond space. With ultra-low rates, explained Caron, fixed income fund managers must on one hand generate alpha, while on the other hand simultaneously deliver beta for risk management purposes. Tactical trades enable this. “Flexible management and unconstrained portfolios are the future of fixed income,” Caron asserted.

Download the Report: Dawn of a new age: data and sustainability in fund management

Access the complete list of the USA 2020 winners and learn more about the Refinitiv Lipper Fund Awards, visit lipperfundawards.com.


[i] https://www2.deloitte.com/us/en/insights/industry/financial-services/esg-investing-performance.html

[ii] https://www.roboadvisorpros.com/active-management-robo-advisors-try-beat-market/