Canadian fund-of-funds at summit of growth
TheCanadian managed fund market has been blazing a trail in its take-up of fund-of-funds vehicles, with a three year asset capital annualised growth rate of 15 per cent.
The strong flow of funds into these manager of manager offerings places the Canadian fund-of-funds market at the summit of growth for the sector worldwide, according to US-based Cerulli Associates.
Cerulli goes as far as estimating that all positive new sales experienced by Canada’s funds management industry in 2002 can be attributed to the 15 per cent growth of inflows into fund-of-funds.
Cerulli also estimates that the fund-of-funds penetration of the Canadian retail fund market has been lifted to more than 5 per cent from roughly 3 per cent in 1999.
This growth comes in a period when several of the world’s largest manager of manager markets, including those of France and Germany, are shrinking.
Cerulli adds that volatile market conditions over this period have benefited the seemingly risk controlled multi-managers of Canada, with investors having been encouraged to diversify risk.
The growth is being driven by demand from two target markets — beginner investors and high-net-worth clients.
Cerulli says that keeping investment minimums as low as C$1,000, fund promoters are able to package funds for beginner investors, while higher-net-worth clients also use them to avoid capital gains tax.
Cerulli believes fund-of-funds will continue to attract investment capital due to their diversification characteristics and their function as embedded-advice portfolio management tools.
Additionally, the research group also says that the appeal of retail manager of managers will not abate, as they provide the same service to intermediaries but at a more sophisticated level.
Recommended for you
With an advice M&A deal taking around six months to enact, two experts have shared their tips on how buyers and sellers can avoid “deal fatigue” and prevent potential deals from collapsing.
Several financial advisers have been shortlisted in the ninth annual Women in Finance Awards 2025, to be held on 14 November.
Digital advice tools are on the rise, but licensees will need to ensure they still meet adviser obligations or potentially risk a class action if clients lose money from a rogue algorithm.
Shaw and Partners has merged with Sydney wealth manager Kennedy Partners Wealth, while Ord Minnett has hired a private wealth adviser from Morgan Stanley.
