‘In’ or ‘out’ was a hot topic around the tables at Money Marketing’s investment industry shindig last night. Contrary to popular belief, it is hard to see Brexit rolling back red tape for retail investment distribution. This is an area where UK domestic rulemaking is running ahead and beyond the EU.
The UK fund industry is a major beneficiary of the single market as can be seen in our latest European Fund Distribution update, which focuses on the cross-border market that now accounts for €2,939bn.
50% of UK managed fund assets fall into this market and while an agreement for permitting UCITS funds to be sold in a non-EEA UK would eventually happen (as it has for countries like Hong Kong or Chile), these things take time. It begs the question of why pull out of a system that we’ve invested so much energy creating in order to do it all again on an ad hoc basis?
The cross-border market, mainly powered by Luxembourg and Ireland, represents the biggest combined fund domicile in Europe and its market share has increased in the last five years. Its importance for big exporters of investment management is evident.
International platforms serve multiple jurisdictions across the continent and play a key role in cross-border distribution. It is no surprise then that these platforms dominate, based on size, among the leading European fund platforms. Our latest European fund distribution update analyses the platform landscape and reveals that international platforms account for 38% of the assets held in the top 20 European platforms and have increased their share over the last few years. This huge lump of assets is concentrated on only five international propositions. The scale of the UK market means that our largest domestic platforms hold the next largest share of assets at 27%. Cofunds and FundsNetwork are in the top 10 as well as D2C leader, Hargreaves Lansdown. We also see propositions from Italy and Switzerland appearing in the top 20 list with assets concentrated among a small number of institutional players. German platforms also feature with a mix of intermediated, institutional and some D2C propositions.
None of the large international platforms originate in the UK. In fact, very few UK platforms have explored the possibility of operating elsewhere. An exception is the recent launch of Novia Global, targeting international advisers with offshore clients. If the bookie’s ‘remain’ prediction holds true, perhaps the growth that other European platform markets are enjoying may get some UK platforms in the mood for continental excursions?
Next Wednesday 15th June, we will be hosting a webinar where we will be giving an overview of findings from our latest European Fund Distribution research. Those of you interested in hearing a bit more about the different dynamics across the continent ahead of the EU referendum please register here.
On a separate note, many congratulations to all the winners at the Money Marketing Awards last night at the amazing Old Billingsgate. Equilibrium Asset Management was awarded Adviser Firm of the Year, Transact was Best Platform and Vanguard was Best Investment Fund Group, congratulations!