Distribution Outgrows Performance as Asset Managers Pivot

Broadridge Financial Solutions’ 2026 Global Demand Model (GDM) Trends Report finds distribution, not performance, is becoming the primary driver of growth in asset management as firms shift focus to individual investors and expand ETF offerings.

The report projects global professionally managed assets will increase from $127 trillion in 2025 to $164 trillion by 2028. It says future growth will depend on how firms respond to geopolitical uncertainty, changing investor preferences and rising competition.

The report states returns are becoming less of a differentiator. Firms are reallocating resources to distribution capabilities, product innovation and access to new investor segments to capture net new money.

Nabeel Ansari, author of the report, wrote, “In an increasingly crowded marketplace, ‘distribution alpha’ is emerging as a critical success factor, with firms evolving from investment-led organisations to distribution-led organisations in pursuit of growth.”

Active exchange-traded funds are central to that shift. The report finds active ETFs are expanding beyond North America, with rapid rollouts in Europe and the Asia-Pacific region as managers introduce new strategies to attract retail and institutional flows.

The report adds that many investors do not distinguish between fund wrappers and instead want clear access and transparent terms. “Being candid I don’t think the end investor is thinking about mutual funds or ETFs – they want access to their money and want to understand terms,” Ansari wrote.

Fee pressure remains intense. Broadridge’s data shows many active ETF strategies charge management fees in a range of about 16 to 30 basis points. The report says new entrants must scale quickly to make their models viable, and margin compression is encouraging managers to target retail clients.

Regional market structure affects adoption. The report cites Germany’s retail savings platforms and strong low-cost brands as drivers of ETF use there. It says the UK has slower platform migration because many systems were built for open-ended investment companies and need updating; the report also notes a cost-of-living squeeze is slowing growth in the UK.

The report flags tokenisation and digital markets as potential longer-term alternatives to ETFs. It says tokenised funds could offer private-market access by issuing tokens on private chains but adoption faces barriers because not all investors have digital wallets or are comfortable with token-based investing. The author does not expect tokenisation to replace active ETFs in the near term.

Broadridge concludes many managers are prioritizing distribution capability, product packaging and access to individual investors as they seek net new money.