Looming RDR will see more fund closures
From Regulation Jan 12 2012 BY: Esther Armstrong
, Senior Reporter
, Portfolio Adviser
The approach of RDR will see the funds industry continue to shrink in 2012, with big-name managers retiring and fund mergers and closures more common, according to Thames River Multi-Capital.
A move by asset managers to streamline product ranges to focus on cost reduction and product strategies is bound to be seen in the run up to the implementation of RDR, said Rob Burdett and Gary Potter, co-heads of the firm.
They said following on from a terrible year for the markets last year, the combination of continued market uncertainty and structural changes in distribution would mean the number of new fund launches would stay muted.
Absolute Return Fund, a recent engine of innovation, still need to prove themselves, which will act as a further hindrance to any potential growth of the funds industry at least for the short term, Burdett and Potter added.
Burdett explained: "Product rationalisation in our view will be partly driven by the economics, as fund firms lock down on costs, removing subscale funds where the growth prospects for the foreseeable future are weak once RDR comes into effect.
"Nearly all UK retail asset managers are reviewing their product strategies, as they think about post-RDR pricing, where new share classes may be required.
"Understandably, a by-product of this will be the identification of funds that are candidates for closure or merger."
Yesterday Barings announced the merger of its Absolute Return Global Bond Trust into its Multi-Asset Fund and Cazenove became the latest firm to reveal an RDR-friendly charging structure on its multi-manager range.
Are these two of the big trends for 2012? Let us know what you think below.