Rebalancing the economics of the European mutual fund


Rebalancing the economics of the European mutual fund

A proliferation of funds established across Europe has left legacy issues that pose a challenge to the profitability of European mutual funds. These issues include bloated umbrella structures, a lack of concentration of strategic domicile, fragmented service provider arrangements and inefficient cost structures.

This challenge has become more complex over the past few years, as European mutual funds have sought to comply with new regulations designed to improve transparency, enhance investor protection and curb the potential for systemic risk.

Executive summary

  • Inefficient legacy fund structures together with increasing cost and transparency pressures from new regulations requires new solutions to rebalance the economics of the European mutual fund
  • The average European fund is 1/7th the size of its U.S. equivalent
  • Four areas in particular may provide substantial benefits to the objective
  • Transformation of distribution remuneration arrangements and channels:

- Fund restructuring and 'super-sizing'

- Innovation in product mix and packaging

- Service provider leverage

  • A 'do nothing' scenario risks driving retail investors into a self-service or 'do-it-yourself' approach, and therefore largely outside the protections EU policy makers have carefully constructed
  • Solutions are available and being increasingly deployed as the pioneers and innovators of the fund management industry lead the way, and industry-wide competencies evolve around successful case studies

Performance issue 12 - September 2013

Performance is a triannual digest, dedicated to investment management professionals, which brings you the latest articles, news and market developments from Deloitte’s professionals and clients. 

Performance issue 12
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