Big squeeze on fund numbers

The European industry is set for an unprecedented wave of closures

The European fund industry is set for an unprecedented wave of closures and heightened concentration, according to industry figures.

A survey of 70 fund managers, platforms and distributors found that 62 per cent anticipate a 10-30 per cent fall in the number of funds across Europe this year.

This would imply a reduction of between 2,800 and 8,400 funds from the 28,136 available as of August 2012, according to data from Lipper FMI, a total that has fallen by just 449 since 2008.

“The writing is on the wall,” said Holly Mackay, chief executive of The Platforum, a research firm that conducted the research alongside Cerulli Associates. “[Fund] platforms are reporting higher concentration than ever. If you look at what people are buying, it’s the top 10 funds.

“There will be midsized fund managers just shutting up shop because you either need to have great performance or a big brand. People do think there is going to be a significant reduction in both the number of fund managers and the number of funds.”

Gibraltar-based Helvetic Fund Administration claimed separately last week that a number of smaller fund groups had been “forced” to close by an increasing burden of regulation and compliance.

Ms Mackay said creeping moves to ban or restrict commission payments across much of Europe were also leading some banks to abandon open architecture – selling funds from rivals alongside in-house ones – and embrace a closed model, squeezing out independent managers.

Two-thirds of platforms and 60 per cent of the fund managers surveyed believed that even on open architecture platforms, 60 per cent of assets will be held by just 10 managers by 2015.

The research was commissioned by the Fund Platform Group, an association that represents fund distribution platforms.

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