Institutional investors are increasingly reassessing their relationships with asset managers, with a rising number of mandates under review, according to investment consultants. The surge comes as clients scrutinize fund managers’ long-term track records and evaluate their ability to navigate evolving market conditions.
Consultants say that investors are holding managers more accountable for performance shortfalls, especially in light of heightened volatility and uncertain economic outlooks. This renewed focus on results is putting pressure on asset managers to deliver consistent returns and demonstrate alignment with clients’ investment objectives.
“Clients are becoming more discerning and are no longer willing to accept underperformance over extended periods,” said a senior consultant at a global investment advisory firm. “When mandates come up for review, performance across various cycles, transparency, and fee value are all under detailed evaluation.”
Amid the changing landscape, many institutional investors—including pension funds, endowments, and insurance companies—are demanding improved reporting practices and clearer benchmarks. They also seek a greater emphasis on risk management approaches and the integration of environmental, social, and governance (ESG) factors.
This uptick in mandate reviews points to broader shifts in the asset management industry, where traditional players face growing competition from low-cost passive funds and specialized boutique firms offering tailored strategies. As a result, firms that fail to meet performance expectations or innovate risk losing significant business.
In response, some asset managers are investing in technology and expanding client communication efforts to better demonstrate their value propositions. However, industry observers caution that only those who can consistently meet investors’ financial and fiduciary goals are likely to retain and grow mandates in the current environment.
Overall, the intensifying scrutiny underscores a shift toward greater accountability and performance-driven decision-making among institutional clients, highlighting the importance for asset managers to adapt quickly or face the risk of mandate termination.
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