This issue of The Cerulli Edge—U.S. Monthly Product Trends analyzes mutual fund and exchange-traded fund (ETF) product trends as of July 2021, and explores rising adoption of outsourced chief investment officer (OCIO) services in the institutional space and growing demand for multi-asset-class solutions.

Highlights from this research:  

• Mutual funds kicked off the second half of 2021 by adding net positive flows ($23.1 billion) and growing assets by almost 1%. Total assets now stand at $20.3 trillion. Investor demand for the ETF is still on display as assets grew from $6.5 trillion to more than $6.6 trillion in July (increase of 1.5%). Net flows totaled just less than $49.6 billion—equal to 0.8% organic growth for the month.

• OCIO is an area of the institutional market that is expected to grow faster than the overall institutional market. The demand for strong multi-asset management programs continues to grow both inside and outside of the OCIO space. One major benefit of an OCIO (and multi-asset strategies) is the ability to make tactical asset allocation changes during market dislocations such as those experienced during the beginning of the COVID-19 pandemic in 2020. OCIO providers report they were able to quickly adjust portfolios both to rebalance and take advantage of investment opportunities that were only available for a brief time.

• Many institutional sales professionals with whom Cerulli spoke mention that they are aware of demand for multi-asset-class solutions; however, they believe demand is still in its nascent stages. Cerulli has found various indications that demand for multi-asset-class solutions is growing and will be an important part of an asset manager’s product lineup. In the second quarter of 2021, Cerulli surveyed a group of consultant relations professionals. Almost half of this group (46%) report that they experienced an increase in consultant interest in multi-asset-class solutions, compared to just 8% reporting a decrease in interest from consultants. Multi-asset-class solutions present a mutually beneficial relationship between asset owners that are looking to consolidate manager lineups, and asset managers that are looking to increase efficiencies. Cerulli sees expectations from request for proposal (RFP) and consultant relations groups as strong indications that demand for multi-asset-class solutions will increase over the near term.