The CEO of a $360 billion asset manager says the industry needs fewer products and less innovation
Charles Schwab Investment Management
- Individual investors are suffering from information overload from too many options, Marie Chandoha, chief executive officer of Charles Schwab Investment Management, told Business Insider.
- Asset managers should focus less on innovation and more on simplifying their line-ups, she said.
- Managers also need to consider the best types of products for an investment strategy. Just because ETFs are popular, Chandoha cautioned, doesn't mean they're the best option.
Investors have more options to put their money to work than ever before - but that's not necessarily a good thing, says one of the asset management industry's leaders.
There are now more than 10,000 mutual funds and exchange-traded-funds, according to Morningstar. Investors have a hard time choosing among all those options, Marie Chandoha, chief executive officer of Charles Schwab Investment Management, told Business Insider in a recent interview.
"No matter who they are, [investors] say 'there's too much product out there. It's overwhelming; it's hard to get through,'" Chandoha said. "I don't think that's good for the industry ... You don't need to have complicated products to get good results."
The business that Chandoha oversees manages $360 billion for a variety of clients, from individual investors to registered investment advisers.
Sign up here for our weekly newsletter Wall Street Insider, a behind-the-scenes look at the stories dominating banking, business, and big deals.
"I really hope the industry moves toward less innovation," Chandoha said. "I've been using this phrase 'simplicity is the new innovation.'"
Chandoha's successor - she's retiring in March - told Business Insider in December that the business is growing differently than its peers, by focusing on high-quality, low-cost products in categories that scale instead of by expanding its menu. For example, the firm offers 22 exchange-traded funds and 85 mutual funds, while BlackRock lists 344 ETFs and 595 mutual funds.
Chandoha said that increasingly popular ETFs may not be the right fit for some investment strategies, including alternatives. Index funds, for example, work well in an ETF, while a less liquid asset class is better suited for a closed-end fund.
"Being thoughtful about what kind of wrappers make sense for what kinds of asset classes is important," she said.
- Pathan, Liger, Godfather: Here’s a list of forthcoming movie releases that will decide the fate of the multiplexes
- Taj Mahal continues to lose its sheen due to pollution in the Yamuna and industrial emissions
- ICICI Bank market-cap hits ₹6 lakh crore as its stock rises to a record high
- Jio, Airtel could emerge stronger weakening Vodafone Idea further, say analysts
- Foreign investors pour over Rs 12,000 cr in Indian equity in last 10 days