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UK Fund Supermarket Industry May Face Consolidation

by Carla Johnson, Investors Offshore.com

13 December 2001


A new report from research group Datamonitor has found that fund supermarkets in the UK are likely to consolidate as industry growth slows./font>

The report, 'UK Fund Supermarkets,' says that the present number of 16 operators in the UK fund supermarket industry is set to increase to 20 before the end of the year with the launch of fund marts by financial services institutions such as Legal & General, Norwich Union and JP Morgan Fleming.

However, Datamonitor estimates that the UK retail investment market is unlikely to sustain such a high number of fund supermarkets in the long-term and the market will be unable to expand quickly enough. Already the process of consolidation has begun with the acquisition of Interactive Investor International by AMP earlier this year in July.

The report also suggests that UK fund supermarket industry is likely to be marginalised by the Independent Financial Adviser (IFA) market which is the major outlet for UK retail investments and fund supermarkets operating within the business-to-consumer market should muscle in on this outlet.

Fund supermarkets are urged by the report's recomendations to resist charging fees or commissions for IFA clients on the sale of a product as well as providing discounted products to investors. Darren Oliver, Datamonitor financial services analyst and author of the report, said: 'The majority of fund supermarkets in the UK tend to offer products to either direct investors or IFAs, with few catering for both. Datamonitor believes that the business-to-business channel will become the leading source of revenue for fund supermarkets in the next five years, meaning that those fund supermarkets offering products to direct investors only will potentially lose out.'


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