Platform providers face consolidation challenge
Merger and acquisition activity among the larger funds management groups has meant many now face the challenges of consolidating assets within multiple platforms into single platforms, according to research houseAssirt.
The Assirt Platform Market Share Report for the December quarter of 2002 claims that this will be critical for some groups, including Commonwealth/Colonial First State,BT/Westpac and National/MLC, if they are to benefit from economies of scale.
“What groups will be faced with is transferring funds over to their preferred platform, as having three or four only multiplies the costs incurred in running them,” Assirt head of investment solutions Steven Gamerov says.
Assirt says consolidation has resulted in an increasing concentration of assets among the top 10 providers in the market.
The strongest flows for the December quarter were into BT/Westpac and Commonwealth/Colonial First State, who both took in $530 million.
According to Assirt, Commonwealth/Colonial First State was buoyed by strong flows into its new FirstChoice master trust.
“The flows are a result of its popularity with advisers, as there is quite a good commission, and the migration of business from other platforms in the group,” Assirt funds research manager Caroline Saunders says.
She says that the Commonwealth/Colonial First State group has taken one of the options available to groups now forced to merge master trust assets into one vehicle by building the new FirstChoice platform and migrating funds to it from other platforms.
“They will continue to get good flows going forward as a result of this factor,” Saunders says.
According to Gamerov, master funds and wraps are attracting an increasing portion of the whole retail market with net inflows of $3 billion over the December quarter.
However, inflows for the December quarter were weaker than in the September quarter, when fund inflows reached $4.2 billion.
Net inflows for the year to December were $18.5 billion, with the total market having grown to $149 billion.
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