Fund platforms are no longer simply intermediaries linking asset managers and distributors. This is especially true of institutional platforms, which over recent years have moved far beyond their traditional role as facilitators of fund transactions and distribution agreements. They are increasingly impacting the day-to-day operations of both distributors and fund providers. Most importantly, this is likely to redefine the dynamics of distribution within the fund industry in the coming years.
Compliance support, data management and functions around fund analysis and selection have been major areas of growth for platforms in recent years. The numbers of distributors using platforms and the asset managers with whom the platforms have agreements, have grown all across Europe. The network effects of this expansion have led to enhanced services and have boosted the value of market intelligence data services. These are likely to become even more crucial.
Extra services offer attractive revenue streams for platforms, but at a cost. Distributors may grow reluctant to pool their resources with those of competitors for the delivery of key functions. A divide will also grow between those asset managers that can afford and benefit from these value-added services and those who can’t. This may ultimately play against the platforms in the long run.
How platforms deal with these conflicting forces will shape the industry’s future. Attitudes to value-added services vary widely among top platforms, ranging from Allfunds’ maximalist approach to the more selective strategies of MFEX and Fund Channel. Our recent survey among 212 asset managers shows that all approaches have pros and cons, and that the jury is still out as to which model will prevail.
European Fund Distribution: European Platforms is the first report in Platforum’s European Fund Distribution series in 2020. This report covers B2B institutional, B2B adviser and B2C (business-to-consumer) fund platforms across Europe. Download the report outline here.