Michael J. Woods was promoted in May to his current position at DWS Investments Americas, a retail asset management division of Deutsche Bank. Here he talks with OWS Senior Editor Lorie Konish on new products DWS has in store and how the industry can better meet changing retirement needs.
1. How do you plan to bring DWS forward in your new role?
We're now at the point where we're trying to execute on our plan. Phase one of the plan in 2010 was really to stabilize the business, establish the right model in terms of attracting great people to the platform, retaining our best talent that we have in the platform, and then rewarding them for doing a good job. Secondly, [part of the] stabilization was to also enhance the product lineup to make sure that we get the right type of products out to the client, as well as enhance existing products … or adding different non-core related type of enhancements to different products. And now in 2011, continue on the things that we did in terms of executing at the point of sale with the model, both at the home office and also with the advisors in the field. Our gross sales are up, our net sales are up, our revenues are higher and our bottom line is better. So far the plan is working.
2. Can you elaborate on the non-core related type of enhancements that you're making?
[One example is} our commodities fund, which last April we changed from a portfolio manager stock-picking fund to more of a pure commodity-based mutual fund with a volatility overlay to it. And that's really the only one of its kind out in the marketplace … It's really more a smart data type of product because you're getting direct commodity exposure, unlike most other commodity funds which are really a portfolio manager picking companies stocks that have commodities exposure.
3. Are there particular product areas where you see the most future growth for DWS?
We're focusing on higher inflation, higher interest rates and higher taxes. On the inflation side, we definitely think this is becoming a valid reality, not just inflation domestically, but also imported inflation from foreign countries, from developed markets, etc. So there our commodity fund, our floating rate loan fund, and then dividend oriented equity stocks have really been our story there that we've changed Secondly, interest rates going higher. In April we took a short duration fund and we morphed that into an ultra short, basically it can be at duration zero so that clients can really have an ultra short duration product. If interest rates, over the latter part of this year going into 2012, start to turn around and go higher quickly, then there's no doubt people are going to have to shorten the duration of their clients' portfolios. We're trying to get ahead of that with our ultra short fund. The third thing that we're talking about a lot is obviously the threat of higher taxes. We still believe in the fundamentals of the municipal bond market. We're pushing it very hard trying to increase our market share.
If you're looking at new financial products, you probably will see us try to develop an unconstrained bond. We hear a lot from our advisors to have a more flexible global equity product, [and] I think that we could use that. I think you may see us try to really make a statement in the equity dividend area. We've got the capabilities in house to be able to expand upon that, not just on a global basis, maybe even domestically to have more of a fund that's a domestic equity oriented dividend type of fund, and even maybe emerging markets, having an emerging market high dividend strategy.
4. How do you see the products that you're bringing out reflecting changing retirement needs?
The bulk of that topic is income in retirement. The income in retirement is still pretty dominated by the variable annuities space. They've got that locked down pretty well and they do an excellent job of that. The mutual fund industry is still a bit challenged in trying to find a really dynamic solution for the income and retirement world. We're trying to do that as well with different things such as custom target date funds, the dividend paying stocks, fixed income solutions. We'll get there. We're not there yet, either at DWS or as an industry. A lot of us have tried to have retirement income solutions, but we haven't found the golden egg yet.
5. How can financial advisors best communicate about products to clients?
I actually started my career as a financial advisor, and one of the things that I've always noticed, and we're just as guilty as well as an asset manager, is sometimes we try to do too much. Sometimes we try to offer too many things to our clients. Obviously we have to diversify, we have to be nimble at times, and we have to be open to the changes of the market, which happen every day. But being as consistent as possible is usually a good strategy.