In 2004, the average AUM held by U.K. fund platforms was £4.5 billion. This had more than doubled by 2006, reaching £10.2 billion. Aite Group estimates that AUM will double again by the end of 2008.
A new Impact Report from Aite Group, LLC analyzes the top mutual fund platforms in the United Kingdom. It examines the difference in the services these platforms offer and the criteria that platforms use to select which asset managers and products will be listed on the platform. It also looks at the overall assets under management in the platform market, as well as the average inflows.
Platforms, as they are known in the United Kingdom today, have evolved from the fund supermarkets of the late 1990s and early 2000s. Whereas supermarkets offered mutual funds only, and not much else, the platforms of today truly offer a one-stop shopping experience, as well as back-office, accounting, and reporting services. Because of these features, platforms have become perfectly suited to the needs of independent financial advisors in the U.K. The next evolutionary step for platforms is the development of the "wrap" platform. These platforms, herein referred to as wraps, offer everything the traditional platforms do, adding full-tax optimization strategies, and truly all-encompassing financial services.
Looking at the market today, there is no clear picture as to which firms are positioned as a supermarket, a pure platform, or a wrap, and there is no easy way to draw lines between the three categories. However, as platforms are proving themselves to be the gateway to the U.K. market for fund distribution, asset managers are scrambling to understand what the differences in the platforms are and, more importantly, how to be included among a platform's list of select funds offered.
"There is no question that the platform industry is continuing to evolve and improve over time, and we expect to see major changes in the near future," says Phillip Silitschanu, senior analyst with Aite Group and author of this report. "Chief among these changes will be the rapid development of more platforms into wraps - essentially the future of the overall platform market. There will also likely be an enormous amount of flow entering the market, due in large part to the U.K. government's changing regulatory stance."
In this report, Aite Group names the top platform in each one of three categories. While Allfunds received the "Best Overall" award, FundsNetwork received the "Best Pure Platform" award, and James Hay received the "Best Wrap" award.