Institutional fund platforms have unexpectedly become a force that is set to shape the future of fund management – despite their being unlikely candidates for headlines even in the trade press. Once a mere appendix of a couple of banking groups in Europe’s periphery, they are starting to have an unprecedented impact on the European industry.

Massive consolidation is the most visible aspect of this revolution. The past three years have seen a series of deals involving private equity firms, large banking groups and securities services businesses. Three players – Allfunds, Clearstream and MFEX – will shortly account for more than €1 trillion of fund distribution agreements across the continent. According to our data, this amounts to well over two-thirds of the total assets administered by institutional platforms.

Providers of fund distribution are now in a position of great power. We get indications of this in the views of over 200 asset managers that we have collected for our soon to be published, European Fund Distribution: Platforms report. Fund management firms seem to be polarising into two increasingly distinct tiers: those that are forced to pay for distribution, and those with enough power to mean that other players must pay to access them.

The feedback also points towards another emerging fact of life: scale isn’t everything after all. As the fund industry evolves – accelerated by increased expectations around ESG in a post-covid-19 world – the success of institutional platforms could ultimately depend on their ability to promote a healthy, more sustainable fund business.

Platforum is putting the final touches to its report on the European platform market. For more information please contact Jean-Luc de Jonge.