Mood of the month

Fairly optimistic
The European fund buyer’s mood index after having dropped on 60.8 points (in July was navigating on 62.1 points) in August lightly rebounded reaching 61.8 points in September. The general downtrend kept being driven by UK, Sweden, Switzerland and Belgium where less of 40% of the interviewed fund selectors declared to be optimistic over the next 12 months. On the other hand Spain and Germany managed to offset the general negative mood with over 65% of optimistic and very optimistic fund buyers in September.

Distributor commentary

For the week ending 30th October 2017
  • “The direct distribution online and the disappointing performance in the mixed and bond fund sector will lead to subsequent disappointment among investors. I also think that the whole regulatory issues will turn out to be to the detriment of retail investors as their monies will be "misdirected" into low-risk investments, since one is forced to avoid risk in order to protect the retail investor and will end up doing the exact opposite. Ad result we will jeopardise the entire asset planning/retirement planning of our retail investors as the long-term performances of risk-free investments equate to zero.”

    Drivers of change
    Germany, Private client portfolios - Discretionary
  • “PRIIPS will disrupt my sector in terms of regulatory constraints. The other disruptive element will be the flat tax. The life insurers have been fighting for years to push their clients into subscribing to unit-linked products. The arrival of the flat tax will direct customers towards unit-linked products but on securities portfolios rather than life insurance, and life insurance will be used as a high-return short-term option via life insurance funds.”

    Drivers of change
    France, Insurance - including unit-linked products
  • “MiFID will increase red tape for the fund industry. Documentations are becoming more complex and we are getting emails nearly every day advising us what needs to be checked to fulfil the new legal regulations. When I prepare for my customer consultations I need to make sure that I have all the necessary information from the fund company which is why I want them to keep me updated about regulations. More red tape also causes costs to increase. Fund companies will see their margins shrink due to higher costs which can’t be passed on to someone else.”

    Drivers of change
    Switzerland, Retail Banking
  • “I think that one of the most important potential drivers of change over the next few years will be the ability of active managers to make their funds stand out by comparison with passive alternative. Others will be the revision of product-pricing structures, and the ability to create flexible, 'ready to use' strategies that can fit readily into clients' portfolios.”

    Drivers of change
    Italy, Private client portfolios - Discretionary
  • “I am very optimistic for the fund industry because the markets are quite buoyant which creates openings, particularly in Luxembourg, which is the industry hub. Performance can obviously affect the market, but in general I do not see what could stop this good momentum. In contrast, the increase in regulatory requirements could be a problem for some funds such as high yield or alternative funds.”

    Drivers of change
    Luxembourg, Funds of funds management
  • “MIFID II will strongly influence the share classes offered by asset managers. The ones that pay commission to distributors will disappear. I think that this could put some managers in difficulty: those who are not in partnership with a large distributor or a bank. The managers that currently distribute their funds via institutions could soon be asking their clients for higher management fees to compensate for lack of commissions. They could therefore be tempted to either manage funds in-house, or replace funds with index tracking funds or ETFs to reduce fees.”

    Drivers of change
    Belgium, Private client portfolios - Discretionary


14 November 2017
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By Fiona Maciver

After all the blood, sweat, tears and delays, implementation of Mifid 2 is palpably close.

This is Fund Buyer Focus’s last quarterly update on distributors’ perceived drivers of change before the big day and, unsurprisingly, regulation remains at the forefront of minds, followed by pricing and cost. Where the relative importance of the former has remained fairly flat,

Translate perception into business.

Fund Buyer Focus offers reporting and consulting services which provide third party retail fund suppliers with detailed information about how the major fund distributors perceive them and how this perception translates into business.

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