Benjamin Reed-Hurwitz, Head of Research and Development for EMEA and North America at ISS MI, joined Asset TV to outline several forces that are redefining fund distribution, product demand, and portfolio construction in 2026.
Watch the video below and read on for five key insights that are shaping the year ahead.
Net Sales Remain Muted and Investors are Still Hesitant
One of the defining features of the 2025 U.K. fund market was weak net sales into investment funds. Investors are contending with a mix of economic and geopolitical risks, which has led to what Reed-Hurwitz describes as a “fragile and hesitant investor.”
This caution is reflected in muted flows across both money market and long-term funds. Because net sales represent the “flow of the river” in the investment ecosystem, this trend has critical implications for every segment of the distribution chain. With fewer new assets entering the system, the competition to capture existing flows is intensifying.
Intermediaries are Transforming and Gaining Influence
The intermediary landscape (including IFAs, wealth managers, and advisers), is undergoing a significant change. These professionals sit at a critical point in the value chain, directing where client money ultimately lands.
MarketPulse shows a real-time view into evolving portfolio construction trends with advisor flow data: where new money is going, where assets remain parked, and where dislocations appear. These insights are central to understanding fund flows.
The Rise of the Blended Portfolio: Active + Passive as the New Norm
One of the most significant structural shifts underway is the move from active vs. passive to active and passive. Today’s portfolios are increasingly blended, using passive strategies for benchmark exposure and cost-efficiency, while active strategies remain essential for generating alpha (when priced appropriately).
This blended approach reflects:
- Demand for cost-conscious portfolio solutions
- Greater scrutiny of active manager value
- Expanded global exposure across equity and fixed income allocations
Pricing Pressures are Redefining Product Positioning
Competition is intensifying, particularly for the limited flows still available. With low net sales across the industry, every provider, from model portfolio platforms to single-strategy managers, is experiencing acute pricing pressure.
A few key dynamics are driving this:
- More cost-conscious portfolios are raising the bar for value assessments
- Alpha remains in demand, but only at a price investors perceive is fair
- Clear and consistent outcomes are becoming non-negotiable
Moving forward, asset managers will need crisp, compelling narratives that justify their place in a blended portfolio.
Consolidation and Partnerships are Reshaping Distribution Power
Partnerships between distributors, solution providers, and asset managers are becoming a defining feature of the U.K. market. This shift is driven in part by the rise of large wealth management consolidators, which now wield greater buying power and can influence product development more directly.
At the same time, the growth of model portfolio providers and multi-asset solutions is creating a new layer in the distribution chain: portfolio constructors who sit between advisers and asset managers. These constructors seek the right building blocks for their solutions, giving rise to deeper one-to-one strategic relationships with managers.
As flows consolidate with these key players, partnerships will become a major determinant of future asset growth.
Looking Ahead: What Asset Managers Must Do in 2026
Despite the challenges, Reed-Hurwitz sees significant opportunity ahead. To succeed in 2026, asset managers must:
- Segment buyers efficiently, understanding each unique portfolio constructor’s needs
- Clarify the value their strategies bring to a blended portfolio
- Define their role: are they managing underlying funds, model portfolios, or both?
- Communicate value with precision, ensuring their offerings stand out in a crowded, competitive market
