Smaller banks muscle in on sub-advisory market
Europe’s smaller banks are scooping up an increasing proportion of the US$94 billion European managed fund sub-advisory market, which consists of funds managed by a single asset manager on behalf of a vendor.
Regional banking networks accounted for 18 per cent of continental Europe’s US$30 billion of sub-advised managed fund assets at year-end 2002, up from 10 per cent in December 2000.
Research group Cerulli Associates says smaller banks lacking large asset management subsidiaries are increasingly using sub-advisors to offer a full array of managed funds under their own brand.
However, in the US, variable annuity providers and banks that have been slow to build managed fund offerings are the main sources of new mandates for sub-advisory groups.
In Europe, 43 per cent of sub-advised managed fund assets result from strategic relationships, according to Cerulli, where a vendor will use a limited number of sub-advisors and new mandates will not be open to competition.
Thirty-five per cent of managed fund sub-advisory assets in Europe go to unaffiliated sub-advisors who compete on their merit and performance.
In contrast, Cerulli says that on a global level, 11 per cent of assets go to strategic partners. In the US the figure is only six per cent.
The research firm says that sub-advisory relationships, which can involve white-labelling or co-branding, can benefit manufacturers because it gives them access to new markets and sub-advisory assets are relatively “sticky”.
The primary risk of the managed fund sub-advisory business for asset managers, according to Cerulli, is an inherent loss of control over product marketing and asset gathering.
Recommended for you
Two commentators have shared why cultural alignment can be the biggest deal breaker when it comes to advice M&A and how to ensure a successful fit.
With an abundance of private market options coming to market, due diligence becomes increasingly important as advisers separate the wheat from the chaff, adviser Charlie Viola has said.
The Treasury has launched a consultation into how the $47 million special levy for the Compensation Scheme of Last Resort will be funded.
With the final tally for FY25 now confirmed, how many advisers left during the financial year and how does it compare to the previous year?
