Fund Supermarkets in the UK 2007: Industry Research Report

Fund Supermarkets in the UK 2007

Published Date: January 2008

Published By: Datamonitor

Page Count: 39

Order Code: R313-29375

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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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