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RBC Dexia and Accenture report predicts sweeping changes to Spanish investment industry

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The shape of Spain’s asset management industry is set to change dramatically according to a report by RBC Dexia and Accenture.

The report predicts further concentration of the industry into fewer, more specialised managers and a stronger focus on improving efficiency and performance. Improvements in technology will also be key to success, with outsourcing high on the agenda.

José Maria Alonso-Gama, Managing Director of RBC Dexia in Spain, says: “Spanish fund firms are concentrating on bottom-line indicators such as fund performance and increased assets under management. They recognise the need to restore credibility and investor confidence by showing they are delivering on their performance promises.”

Although the industry is dominated by a small number of firms, with the top three managers accounting for 45 per cent of assets under management, the average size of funds in Spain is only €57m. This compares with an average of EUR300m in Switzerland and EUR262m in the UK. The total number of funds in Spain has been contracting – down by about 20 per cent to 2,500 in the past three years due to industry consolidation – and the report expects this trend to continue with, “the evolution of larger and more specialised companies with rationalised fund ranges”. 

Also according to the report:

Of the 33 investment companies surveyed for the report, 95 per cent of local managers and 91 per cent of foreign managers cited increased assets under management as a key indicator of success over the next two years. Fund performance was cited by 91 per cent and 73 per cent respectively and increased service quality by 86 per cent and 45 per cent. When it came to development of new products, 36 per cent of foreign managers cited this as important but only 9 per cent of local managers.
 
Over 80 per cent of independent managers in Spain believe that the Undertakings for Collective Investment in Transferable Securities IV (UCITS IV) directive will make it easier to distribute investment funds abroad by creating a common regulatory environment. However, 70 per cent of local managers were also concerned that it would lead to increased competition from overseas funds while independent managers were worried it would result in increased reporting obligations.
 
More than two-thirds (70 per cent) of fund managers surveyed cited improving technology as the most important factor in increasing efficiency. Most managers (90 per cent of foreign managers and all local Spanish managers) expected an increase in the number of fund managers outsourcing certain functions in coming years. And 90 per cent of those surveyed said there would be an increase in the diversity of functions outsourced in coming years.

“The increased risks control imposed by new regulations and cross-border distribution opportunities that they also create, require increasingly sophisticated technology,” says Diego López Abellán, of Accenture’s Capital Markets practice for Spain “Outsourcing can play a pivotal role in enabling continuous technology upgrades while avoiding costly investment.”
 

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