What's next for funds?

ETFs and fragmentation

The factors behind the strong growth of Exchange Traded Funds (ETFs), insights into the investor base favouring this asset class, but also the challenges due to a fragmented European ETF market were covered in the latest survey of 124 fund professionals carried out by funds europe in association with Clearstream. The report is the second in the “What’s next for funds?” series launched earlier this year.

As a flexible, transparent and low cost asset class, ETFs have a broad appeal and the majority of survey participants forecast an annual growth rate between 10% and 20% in Europe. The survey has further shown that ETFs are meeting the needs of an increasingly sophisticated investor community including active fund managers using ETFs more and more as part of their portfolio allocation.

Disintermediation and the future of the funds industry

The findings about open architecture – its benefits for investors and the threat from financial and regulatory pressures - were some of the most eye-catching results from a recent survey of around 200 fund professionals carried out by Funds Europe in association with Clearstream. The report, "Disintermediation and the future of the funds industry", is the first in a series to answer the question, “What’s next for funds?”

The survey comes at an interesting time for the industry. The traditional channels by which investors buy funds, such as banks and financial advisers, are being challenged by new channels, such as online platforms and robo-advisers. At the same time, regulation such as the retail distribution review (RDR) in the UK and the Markets in Financial Instruments Directive (Mifid) in Europe are changing the way by which intermediaries are incentivised to promote investment products.

The survey highlights the dilemma between embracing open architecture and the recognition of its cost. New technology and automation has the potential to make open architecture affordable for distributors and asset managers.