Fund supermarkets will account for at least 25% of new annual inflows to UK unit trusts by 2004. Th...
Fund supermarkets will account for at least 25% of new annual inflows to UK unit trusts by 2004.
This is the conclusion of a report into the UK retail fund management marketplace by Cerulli Associates, a strategic research and consulting firm. It estimated the authorised funds marketplace will grow from more than £265bn today to £555bn by 2004 with IFAs accounting for 65% of the market.
Thomas Marsh, a consultant at Cerulli Associates said the £555bn figure is derived from 17% annual compound growth in the funds marketplace but added this may be conservative as the industry has grown by 21% pa since 1970.
He said: "Fund supermarkets will account for at least 25% of UK authorised funds and our more aggressive estimates indicate a number as high as 35% or 40%."
Two to four fund supermarkets will dominate, representing around 90% of the marketplace, leaving little room for smaller competitors, according to Marsh, although he admitted it was too early to identify those supermarkets likely to be dominant.
He said: "Firms perceived as first movers traditionally end up in market-dominant positions and supermarket vendors entering the marketplace after the first quarter of 2001 are less likely to claim a significant portion of the new capital inflows."
Marsh added a healthy portion of unit trust and Oeic inflows attributable to fund supermarkets will come from independent financial advisers using the platforms as back office solutions for their practices.
IFAs accounted for 51% of annual net new inflow into UK unit trusts at the end of 1999 and Marsh said they should cement their position as the dominant distributors of retail funds.
‘Important to have an anchor’
Report to be written by TPR
Lack of innovation for solutions
Some 2,000 consumers affected