European fund platforms have seen rapid expansion in recent years and despite consolidation, growth is expected to continue driven by the emergence of new distribution channels, restructuring, and regulation.
That’s according to the December issue of The Cerulli Edge-Global Edition.
In collaboration with Luxembourg-based trade association The Fund Platform Group, Cerulli Associates surveyed many of the most influential platforms, fund buyers, and fund sellers in Europe, to gauge their views on platform growth, distribution opportunities, and the impact of regulation on the financial services industry.
"Consolidation is a dominant theme with 75% of survey respondents expecting the European market to consolidate around a few champions," says Barbara Wall, Europe research director at Cerulli. "More than one-third of those surveyed believe 70% of funds in European open-architecture platforms will be held by the top-10 managers by assets under management."
Consolidation in the European platform space does not mean standing still: growth is very much part of the equation. Those respondents who believe that growth in European platform assets will be fuelled by an increasing number of distribution channels and overall industry expansion stood at 31.3%. A full 27% forecast growth as a result of industry restructuring, while 20.8% said growth will be strongly influenced by regulation. A modest 18.8% of participants believe platforms assets will stay the same, but only 2% expect a fall in assets.
Expansion is also evident among platforms looking to grow their businesses abroad. An increasing number are considering expanding into other European markets (34.6%), but even more are making a move into Asia (46.2%).
"That European distribution platforms will be paid an explicit fee as opposed to fund manager rebates in the next three to five years was confirmed by nearly 70% of respondents," says Cerulli senior analyst Angelos Gousios. "This reveals a shift to something closer to and in-line with changing regulation."