This week, Senior Researcher Annalise Toberman (@AToberman) looks at fund concentration in the UK and Europe.


We’re über excited – pardon my German – about our latest European report, which we publish on Monday. The report is packed with findings drawn from candid discussions with fund houses, information from the major platform players in Europe, Lipper fund data and an industry-wide online survey. Oh, I almost forgot to mention the whirlwind fact-finding tour of Zurich. Qualitative research and fondue: together at last.

I find one of the most interesting parts of the research to be the analysis of platforms’ top funds and fund managers. Platforms offer thousands of funds and yet relatively few funds/fund managers see significant flows. One French platform revealed that their top 30 funds typically receive 85% of net inflows; a Lux-based platform reported that 85% of assets are held by the top 20 managers.

Across distribution channels, concentration is considerably lower in the UK than it is in Continental markets. Greater professionalism among advisers has meant a reduction in fund manager concentration overall – they are either moving beyond over-reliance on two or three of the biggest fund houses, or engaging with DFMs who pull from a wider range of investment products on their behalf. However, some advisers and discretionaries are actually fuelling concentration, either by slimming down fund panels or focusing on investment solutions instead of bespoke client portfolios.

In Europe, fund/fund manager concentration is also driven by the platforms themselves. Many have asset management capability, and thus are more inclined to promote proprietary funds. Others were originally developed to sell in-house products via internal channels and have only more recently extended their remit to external advisers and third-party products. Looking at the UK market, the clout of an in-house manager varies hugely, accounting for anywhere between 10% and 40% of a platform’s assets.

So which fund managers are the beneficiaries of these trends? We asked the major UK B2B platforms to share the top five fund managers on their platforms. The group who responded had AUA totalling £208bn at the end of September 2014. The resulting Star Wars-esque infographic illustrates the top managers on adviser platforms and their relative positions.

Top fund managers across UK B2B platforms

Source: Platforum, based on data collected from ten UK platforms, end of Q3 2014

Naturally, the fund managers affiliated with a platform have relatively strong clout, as well as the ‘likely suspects’ of Invesco, M&G, Jupiter and BlackRock (including iShares). Dimensional and Vanguard have been relatively popular on the smaller, newer platforms that have always had an unbundled pricing model.

Vertically-integrated platforms will continue to see growth in in-house investment product/solution assets, while the more ‘open’ platforms may see passive fund managers and others with a good story experience growth at the expense of the asset management incumbents. The former group is contributing to concentration; the latter is facilitating lower concentration in the fund market. Our market dynamics seem complex compared to those in other European markets, but MiFID II is set to change that. “In a galaxy not so far away…”

Platforum’s 2015 European Fund Distribution Guide is available from Monday. For more information or to subscribe, please contact Rohit Vaswani.