Retail bank distributors saw a near €4 billion drop in assets of sub-advised funds.
Meanwhile, third-party asset managers, along with private banks that are increasingly offering sub-advised services, saw assets rise by €5 billion in the second quarter of the year (Q2), according to the instiHub Analytics data covering Europe, Middle East and Africa.
Wealth managers increased assets by €10 billion.
Andreas Pfunder, founder and chief executive of instiHub, said the figures showed two extremes in the sub-advisory industry, with retail banks on one side losing assets, across from other firms gaining assets.
Pfunder has related the trend partly to commercial arrangements – mainly meaning inducements – which are widely used in retail bank distribution in Europe.
“We have to remember that retail bank affiliated sponsors of sub-advised funds compete against third-party managers’ funds. It comes down to performance, differentiation and [the key point] commercials.”
In research earlier this year, Pfunder noted that sub-advised programmes, both active and passive investment strategies, made “greatest progress” in markets where inducement limitations were in place.
Inducements, which the incoming MiFID II regulation will affect, can continue to be paid to bank distributors in most markets where banks are dominant when the regulation is implemented, Pfunder noted, and so banks’ preference for in-house products will therefore be driven by their built-in margins versus commissions from third-party asset managers.
The latest research showed that in euro terms, bank distributors lost €3.8 billion of assets in Q2, though five firms, which were unnamed, gained the equivalent of $1 billion each with growth coming from Italian, Dutch and Nordic investors.
Asset manager sponsors grew assets by €3.2 billion in Q2 and 16.4% year-to-date.
Private bank sponsors experienced the largest growth in percentage terms, at 14% or €1.5 billion in Q2.
Pfunder said that asset managers needed to broaden their offering to meet clients’ demand in areas where they lack in-house expertise.
He added that the findings, based on publicly available data, showed that the sub-advisory industry “isn’t as sleepy an industry as some assume”.
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