Fund Supermarkets in the UK 2007

Table of Contents

• Overview
  • Catalyst
  • Summary
• Executive Summary
  • Assets under management in the UK savings and investment market reached £1.7bn in 2006
  • The UK fund supermarket industry has developed to meet distribution needs
  • Pan-European legislation has a lesser effect on UK supermarkets than in mainland European markets
  • The main driver of demand for fund supermarkets will continue to be the preferences of advisors
    • Advisors will use platforms as a means of engaging with customers
  • The features of fund supermarkets will evolve to meet advisor needs
    • Fund ranges through supermarkets will become more complex and diverse
    • Volatility in the markets will result in an increased customer demand for structured and alternative investments
  • The future of the fund supermarket is bright
    • The evolution of fund supermarkets into Wraps
• Table of Contents
• Table of figures
• Table of tables
• Market Background
  • Assets under management in the UK savings and investment market reached £1.7bn in 2006
  • Flows of investments into tax efficient wrappers are crucial to the UK investment market and fund supermarkets have benefited from this
• Distribution Dynamics
  • The UK fund supermarket industry has developed to meet distribution needs
• Regulatory Climate
  • The regulatory pressures on UK distributors come from domestic rather than pan-European legislation
    • Pan-European legislation has a lesser effect on UK supermarkets than in mainland European markets
    • The overall pressure of regulation in the UK market is encouraging advisors to adjust their business models
    • Regulatory pressures in the UK market will continue to increase, benefiting fund supermarkets
• Distributor Profiles
  • Cofunds is the leading fund supermarket in the UK
    • Cofunds' primary service offering is for advisors
      • Cofunds' core bond product is the Legal & General Portfolio bond
      • Cofunds' collectives service gives access to over 1000 funds
      • The Cofunds pensions service draws upon the experience of its primary shareholder Legal & General
      • SIPPCentre provides an additional level of pension flexibility for Cofunds customers
      • The Cofunds platforms does not sell directly to consumers
  • FundChoice is the largest customer facing fund supermarket in the UK
    • Cofunds provides administration to other fund supermarkets
  • Fidelity FundsNetwork has successfully translated its US model to the UK market
    • FundsNework launched a new International bond product in 2007
    • FundsNetwork' s Unit Trust OEIC account enables flexible investment in over 1000 funds
    • FundsNetwork SIPP is provided by Standard Life and incorporates all investment options
    • The Fundsnetwork platform supports some of the leading players in the financial advice industry
    • Smile Fund Supermarket offers basic savings product through a supermarket platform
  • Skandia and Selestia launch Selestia Investment Solutions
  • FundsDirect has grown since its launch in 1999 to offer over 1500 funds
  • Transact offers fee-based advantages
• Distribution Strategies
  • The main driver of demand for fund supermarkets will continue to be the preferences of advisors
    • Advisors will continue to grow less fearful of technology
    • Advisors will use platforms as a means of engaging with customers
    • The transition process from commission led to an asset based business model will drive demand for supermarkets
    • Consumers confidence in fund supermarkets will grow leading to increased business for customer facing platforms
  • The features of the fund supermarkets will evolve to meet advisor needs
    • Advisors will increasingly demand solutions that help them deliver a cost efficient service
  • Fund ranges through supermarkets will become more complex and diverse
    • The increased popularity of multi-manager funds allows the limitations of a fund supermarket to be overcome
    • Strategies for choosing funds will continue to grow in sophistication
    • In the UK the fund selection appears to be based on quantity rather than quality
      • The enlarged fund ranges will reach a critical mass
  • Product ranges will grow to include more structured and alternative investments
    • Volatility in the markets will result in an increased customer demand for structured and alternative investments
    • Consumers are increasingly demanding choice, particularly in the pensions space.
    • The move from Defined Benefit (DB) to Defined Contribution (DC) pension provision encourages innovation in pension delivery
  • Platforms must take steps to address the potential disadvantages of fund supermarkets
  • The future of the fund supermarket is bright
    • The evolution of fund supermarkets into Wraps
      • Approaches to entering the Wrap market vary
• 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: UK retail investment assets 2002-2006 £m
    • Table 2: UK tax efficient investment inflows 2002-2006 £m
    • Table 3: Comparative overview of selected UK fund supermarkets
    • Table 4: UK investment assets 2002-2006 £m
    • Table 5: UK tax efficient investment inflows 2002-2006 £m
    • Table 6: UK Unit Trust and OEIC distribution 2002-2006, %
    • Table 7: Gross retail unit trust ISA sales by distribution channel 2002-2006 %
    • Table 8: Distribution of SIPP new business premiums 2002-2006, %
    • Table 9: Responses to the question "How would you summarise your company website?"
    • Table 10: Ownership structure of Cofunds
  • List of Figures
    • Figure 1: The UK retail investment market is one of the largest in the world, with assets of £1.7bn in 2006
    • Figure 2: Between 2002 and 2006 there has been a significant growth in tax efficient investments, particularly individual pensions
    • Figure 3: Over 80% of Unit Trust and OEIC sales came through intermediaries in 2006
    • Figure 4: Fund supermarket sales accounted for 38% of the ISA market in 2006
    • Figure 5: The complex choices available in the SIPP market mean that advice is crucial to purchases
    • Figure 6: Ownership Structure of Cofunds
    • Figure 7: Responses to the question "How would you summarize your company website?"