The Future of Fund Supermarkets 2007

Table of Contents

• Overview
  • Catalyst
  • Summary
• Executive Summary
  • The global asset market is dominated by the US
  • The Australian market tends to have a more focused range of fund options
  • The UK and US markets are dominated by a few large players
    • In mainland Europe most competitors are retail banks
  • Fund supermarkets will continue to be an important distribution channel for managed funds in the future
    • Technological advances are driven by the requirements of advisers
    • Intermediaries will require dedicated services and enhanced platform capability
  • Marketing of products ranges will become more crucial as platforms need to differentiate their offerings
    • Platforms must take steps to address the potential disadvantages of fund supermarkets
  • The future of supermarkets is bright
    • The evolution of fund supermarkets into Wraps
• Table of Contents
• Table of figures
• Table of tables
• Market Background
  • The global asset market is dominated by the US
    • The US dominates the global market for mutual funds
    • Germany' s mutual fund industry is worth USD3,817billion
    • The mutual fund industry in Spain is worth EUR321 billion
    • Superannuation funds dominate the Australian market
• Distribution dynamics
  • The Distribution landscape varies dramatically across the markets assessed in this study
    • US multiple distribution channels have increased competition
    • 65% of the funds in Spain are distributed through retail banks
    • In Germany half of all mutual fund assets under management is attributed to retail banks
    • Australia' s biggest banks also dominate the fund supermarket space
  • The target customer base for fund supermarkets varies across different countries
    • In the US and Australia fund supermarkets are targeted at an older customer base
      • The average US fund supermarket customer is middle-aged with an above-average income
      • The average Australian fund supermarket customer is middle-aged and investing for retirement
    • In mainland Europe fund supermarkets are targeted at a younger customer base
      • Spanish fund supermarket clients are at the opposite end of the spectrum; young and technologically savvy
      • Fund supermarket clients demand control and accessibility
• REgulation
  • In Australia, regulations regarding superannuation are crucial to market development
    • Australians have benefited from the recent superannuation changes
      • Individuals aged 60 and over can access their superannuation benefit tax-free
      • Limitations on concessionally taxed superannuation contributions have changed
      • Post- tax superannuation contributions are limited to AUD150,000 per annum
      • The transitional AUD1 million contribution limit served to boost fund inflows
  • Pan-European regulations have an impact on the development of all distribution channels
    • Upcoming EU legislation (UCITS directive and MiFID) facilitates market development and enhances consumer protection
      • MiFID allows fund managers and distributors improved flexibility, but also introduces new obligations
• Competitor Focus
  • The Australian market tends to have a more focused range of fund options
  • There is a similar range of funds available in all other geographies
  • The UK and US markets are dominated by a few large players
    • Then a few small niche players in the UK who either white-label the larger supermarkets or offer their own funds
  • In mainland Europe most competitors are retail banks
• Distribution Dynamics
  • The main driver of demand for fund supermarkets will continue to be the preferences of advisors
    • Fund supermarkets will continue to be an important distribution channel for managed funds in the future
  • The features of the fund supermarkets will evolve to meet advisor needs
    • Technological advances are driven by the requirements of advisers
    • The success of fund supermarkets is dependent on the efficiency of this technology
    • Intermediaries will require dedicated services and enhanced platform capability
  • Fund ranges through supermarkets will become more complex and diverse
    • Supermarkets are sustaining their growth by offering access to new fund structures and providing complementary services
      • Volatility in the markets will result in an increased customer demand for structured and alternative investments
    • Interest in alternative asset classes is growing
    • Fund supermarkets are pursuing growth by offering banking services and investing in bricks and mortar
    • Strategies for choosing funds will continue to grow in sophistication
    • The cost of funds have fallen across all markets and this trend will continue
  • Marketing of products ranges will become more crucial as platforms need to differentiate their offerings
    • Relationships should be built with advisers and other distribution channels
      • Leading supermarkets in Germany are helping intermediaries to grow their businesses
    • White labeling of fund supermarkets through third parties is a key way of targeting new customer segments
    • Direct distribution and value-added services will shape the future development of the fund supermarket sector
    • Fund managers will continue to rely on direct sales, although supermarkets represent a key element of heir distribution strategies
  • Platforms must take steps to address the potential disadvantages of fund supermarkets
  • The future of supermarkets is bright
    • The evolution of fund supermarkets into Wraps
• APPENDIX
  • Definitions
    • UCITS
    • MiFID
  • Definitions
    • Asset manager / Asset management company
    • Bank
    • Collective Investment Scheme
    • Exchange-Traded Fund
    • Fund of funds
    • Fund supermarket
    • Hedge fund
    • Non-retail market
    • Retail market
    • Structured products
    • UCITS
  • Methodology
  • Further reading
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Tables
    • Table 1: Total retail assets under management, 2002-2006, USDm
    • Table 2: Total retail mutual fund assets under management, 2002-2006, USDm
    • Table 3: Number of funds and number of suppliers hosted by platforms surveyed in all geographies, 2007
  • List of Figures
    • Figure 1: The US dominates global retail asset markets
    • Figure 2: The US mutual funds amounted to USD 9billion in 2006
    • Figure 3: Fund supermarkets account for a very small proportion of fund assets in Spain today
    • Figure 4: Retail banks dominated Germany' s mutual fund sector in 2006