Fund platforms in the UK are predicted to fork into distinct active and passive sales patterns this year.
Only 9% of net sales on UK platforms are passive funds, though several of the top ten fund management firms measured by platform sales have passive capability.
Bella Caridade-Ferreira, CEO of Fundscape, a firm that analyses platform data, said she expected fund sales in 2017 to “bifurcate between passive and a clutch of ‘hot’ actively managed funds”.
This takes place against a background of pressure on fund firms to deliver returns more effectively, and the fact that some platforms that are part of wider active fund management businesses do not offer passive funds.
“Vertically integrated solutions such as Old Mutual and Standard Life have, understandably, much lower levels of passive activity. But passive business will mushroom on platforms that don’t have their own distribution arms,” said Caridade-Ferreira.
She added: “With several passive players in the top 10, it’s clear the passive trend is starting to gain traction. However, there is still only one passive fund in the top 10 funds. On some platforms the market share of passive funds is much higher, but overall they account for 6% of total gross sales, and 9% of total net sales.”
Broader Fundscape data showed that UK platform sales fell 16% in 2016 compared to 2015 – but subscriptions jumped to £10.5 billion (€12.1 billion) in the last quarter of the year after political uncertainty to do with events such as the Brexit vote reduced.
Overall, investors placed £38 billion in funds hosted on fund platforms last year, compared to £45 billion the year before, according to Fundscape.
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