Captive and Direct Channels Challenge Third-Party Dominance in Europe

The rise in affiliated and institutional channels' share of the cross-border funds market confounds expectations

September 02, 2013 2:52 IST | India Infoline News Service
Third-party mutual funds continue to make up more than 60% of European cross-border funds, but marketshare is falling as both captive/affiliated and institutional/direct distribution channels gain traction, according to the latest findings of the third iteration of the 172-page Cerulli Report entitled European Distribution Dynamics 2013: Navigating a Fragmented Marketplace. 

For years, third-party funds dominated the growth of the cross-border marketplace in Europe. But Cerulli's flagship European distribution report reveals a new trend. "This channel is coming under pressure as European distributors have sought to do more via their captive asset management units, primarily as they seek to bolster profitability," says Cerulli Associates' senior analyst Angelos Gousios. The captive/affiliated channel now accounts for 15.7% of cross-border funds (13.8% in 2012), while the share of the direct/institutional channel has also risen to 22.7%, compared with 19.1% a year earlier. 

Cerulli believes that while there is no threat to the dominance of third-party funds within the European cross-border funds segment, changes on the regulatory front in many European countries may result in the continued growth of both the captive and direct segments, making third-party fund managers work harder to maintain their dominant marketshare. 

The good news, according to the Cerulli report, is that the overall share of the cross-border market in Europe continues to grow, and accounted for 43% of European mutual funds at the end of 2012, a full 10 percentage points higher than a year before. 

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