Product Type: Market Research Report
Published by: Datamonitor
Published: January 2008
Product Code: R313-29375Description Introduction
Fund Supermarkets in the UK 2007 examines developments in the UK fund supermarket sector and assesses the distribution channels that are in operation. The report analyzes both the current and possible future trends of the industry.
Scope
Sizes the investment funds market, ISA and pensions market, analysing the distribution of each. Reviews relevant legislative developments and their implications for fund distribution through supermarkets. Profiles leading fund supermarkets in the UK.
Highlights
The UK fund supermarket sector has benefited from investments into tax efficient wrappers; though ISA, investment bond and pension investments. The increased liberation of the pensions market further boosted flows into tax efficient investments through a fund supermarket. The main advantage of fund supermarket products is the access to a large number of funds. Increased investment choice will allow more advisers to fine-tune their customers' pension funds in respect of asset allocation. It also allows financial advisers to engage their customers in deciding upon an investment strategy A key advantage of the fund supermarket industry in the UK is that, it has evolved rather than being set up as an established proposition .This has significantly contributed to its success, allowing features to develop, tailored to the needs of advisors.
Reasons to Purchase
Get an overview of the scope of the investment fund market, including past growth and future growth. Understand key current and future market drivers and their implications for fund supermarkets and fund managers. Use our analysis to inform fund marketing and distribution strategies and adapt to changes in the fund supermarket model.
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?""
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