European Mutual Funds Distribution 2004: Industry Report

European Mutual Funds Distribution 2004

Product Type: Market Research Report
Published by: Datamonitor
Published: June 2004
Product Code: R313-6931

Description

Introduction
Over the past decade the European mutual fund industry has developed significantly, not just in terms of overall size, but also in terms of how funds are distributed both within the national borders and across Europe as a whole. Datamonitor's European Mutual Fund Distribution report provides an in-depth analysis of the current and future distribution landscape of retail investment funds in Europe.

Scope
Detailed analysis including market size and distribution splits for the five main European countries - France, Germany, Spain, Italy and the UK
Based on extensive research including a survey of almost 100 distributors, both banks and financial advisors, across the five main countries
In-depth interviews with more than a dozen leading competitors and industry associations as well as extensive secondary research
Highlights
Bancassurance is key in Europe, with banks dominating the distribution of retail mutual funds in four of the five main European countries. Only in the UK, where banks have been held back by legislation and a failure to make the most of the opportunities available to them, is the distribution of funds dominated by a channel other than the banks

Distribution in Europe has opened up over the past decade but the much-touted concept of open architecture has so far failed to achieve anywhere near the degree of penetration that it has in the US market. Only 43% of mutual fund distributors questioned in France, Germany, Spain, Italy and the UK, offer third party funds to their retail customers.

In the pursuit of a single European market for the cross-border sales and distribution of investment funds, the authorities are making some headway. However, there remain significant obstacles, particularly in terms of national discriminatory taxation that are still hindering Europe's progress towards a single market for mutual funds.

Reasons to Purchase
Distributors: an indispensable industry profile analysing key distribution channels and their potential to help underpin strategic planning
Providers: identify and assess the potential of particular channels for fund distribution and how to satisfy the demands of banks/financial advisors
Support strategic initiatives by identifying the most important funds related regulatory developments across Europe and their potential impact

Table of Contents

TABLE OF CONTENTS

CHAPTER 1 EXECUTIVE SUMMARY 4

Overview 4

France 4

Germany 5

Spain 6

Italy 6

UK 7

Fund distribution: a pan-European overview 8

CHAPTER 2 INTRODUCTION 17

What is this report about? 17

Who is the target reader? 18

How to use this report 18

CHAPTER 3 MARKET CONTEXT 20

Introduction 20

European overview 20

Market size 20

Distribution landscape 21

Regulation and key issues 23

France 27

Market size 27

Distribution landscape 28

Regulation and key issues 32

Key competitors 36

Germany 38

Market size 38

Distribution landscape 39

Regulation and key issues 44

Key competitors 48

Spain 50

Market size 50

Distribution landscape 51

Regulation and key issues 56

Key competitors 58

Italy 59

Market size 59

Distribution landscape 60

Regulation and key issues 65

Key competitors 68

UK 69

Market size 69

Distribution landscape 70

Regulation and key issues 73

Key competitors 76

CHAPTER 4 FUND DISTRIBUTION: A PAN-EUROPEAN VIEW 79

Introduction 79

Fund manager selection 79

Service offering 89

CHAPTER 5 THE FUTURE DECODED 95

Introduction 95

France 95

Germany 97

Spain 98

Italy 100

UK 102

European overview 105

CHAPTER 6 APPENDIX 107

Supplementary data 107

Market context 107

Fund distribution: a pan-European view 110

Research methodology 118

Further Reading 118

Datamonitor Global Wealth Service SPP: Reports 118

Datamonitor Global Wealth Service SPP: Insight Reports 118

Datamonitor Global Wealth Service SPP: Competitor Tracking 119

Datamonitor Savings & Investments SPP Reports 119

Datamonitor Financial Services Consulting 120

SPP writing team 120

LIST OF TABLES

Table 1: Example of fee disclosure required under French simplified prospectus, June 2004 36

Table 2: Best mutual fund providers in France, 2004 37

Table 3: Best mutual fund providers in Germany, 2004 49

Table 4: Best mutual fund providers in Spain, 2004 58

Table 5: Best mutual fund providers in Italy, 2004 68

Table 6: Total value of European retail mutual funds by country, 1998-2002 107

Table 7: Total value of French retail mutual funds, 1998-2002 107

Table 8: Distribution of French mutual funds by channel, 2003 108

Table 9: Total value of German retail mutual funds, 1998-2002 108

Table 10: Distribution of German mutual funds by channel, 2000-2002 108

Table 11: Total value of Spanish retail mutual funds, 1998-2002 109

Table 12: Distribution of Spanish mutual funds by channel, 2003 109

Table 13: Total value of Italian retail mutual funds, 1998-2002 109

Table 14: Distribution of Italian mutual funds by channel, 1998-2003 110

Table 15: Total value of UK retail mutual funds, 1998-2002 110

Table 16: Distribution of UK mutual funds by channel, 1998-2003 110

Table 17: Proportion of funds distributed by banks that are third party 111

Table 18: Proportion of banks offering designated number of third party providers 111

Table 19: Method of mutual fund provider selection 112

Table 20: Important attributes when selecting a fund provider - banks 112

Table 21: Important attributes when selecting a fund provider - financial advisors 113

Table 22: Effects of the downturn on mutual fund provider selection 113

Table 23: Most likely reasons for terminating a relationship with a mutual fund provider 114

Table 24: Frequency for choosing a fund provider 114

Table 25: Number of requests for proposal (RFP) over the last two years 115

Table 26: Most important aspects of service provided by fund provider - banks 115

Table 27: Most important aspects of service provided by fund provider - financial advisors 116

Table 28: Services that banks would like to have online 116

Table 29: Services that financial advisors would like to have online 117

Table 30: Services that retail customers would like from a mutual fund provider 117

LIST OF FIGURES

Figure 1: France remains the largest retail mutual fund market in Europe having experienced the strongest growth since 1998 21

Figure 2: The French mutual fund market was larger in 2002 than in 2000 27

Figure 3: Banks have secured 80% of retail mutual fund distribution in France 29

Figure 4: Germans have shown far greater interest in mutual funds compared to 1998 39

Figure 5: Banks have become increasingly dominant in the distribution of mutual funds in Germany 41

Figure 6: Spanish investment in mutual funds has been poor since 2000 50

Figure 7: Banking networks dominate Spain’s mutual fund distribution, 2003 52

Figure 8: The popularity of mutual funds in Italy is declining 60

Figure 9: Banks are the top mutual fund distributors in Italy 61

Figure 10: The value of UK mutual funds remains above the 1998 level 70

Figure 11: UK mutual fund distribution has become increasingly dominated by the IFA network 71

Figure 12: While two thirds of European banks offer less than 10 external mutual fund providers, the tendency is towards a greater number of distribution alliances 80

Figure 13: A bank’s preference is the most important factor in selection 81

Figure 14: Performance is the most critical factor for banks when selecting fund providers 82

Figure 15: Fees and reputation play an important role for financial advisors when selecting a mutual fund provider 84

Figure 16: The market downturn has reinforced the need for performance 85

Figure 17: Distribution agreements are most likely to end as a result of poor performance and service 86

Figure 18: Banks are far less reactive to market movements than financial advisors 87

Figure 19: The number of requests for proposals have generally remained the same over the last two years 88

Figure 20: Mutual fund valuation and performance data are critical for banks 90

Figure 21: Support from the fund provider is more critical for advisors than for banks 91

Figure 22: Online transaction capabilities are critical for banks 92

Figure 23: Retail customers are strongly looking for valuations and performance data from mutual fund providers 94

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