Big independents call the shots in winner-takes-all market

upward_graph_410When net fund flow figures for 2010 showed an unusually high concentration of new flows for a few companies and funds, people said it wouldn't last. But latest figures from Strategic Insight show that it has lasted and indeed intensified into the first quarter of 2011 at least.

Figures from the New York-based research house reveal that 0.3% of mutual funds around the world gathered in over 100% of net flows – a net cash total of $210bn – in the first quarter. This represents a consolidation of the 2010 position when 350 funds out of the 68,000 funds available globally attracted 89% of all flows into long-term funds. The 100% of flows committed to blockbuster products in the first quarter of 2011 were allocated across just 200 funds.

According to Strategic Insight, the principal beneficiaries of this trend are big independent fund management houses and blockbuster boutiques. Its latest report on the trend, David and Goliath in the Global Asset Management Industry, features case studies from the fastest growing boutiques around the world, such as Carmignac and Bluebay in Europe, Value Partners and Huashang in Asia, and Double Line and Pacific Heights in the USA – the winners in this scenario.

Europe’s Carmignac Gestion provides a sterling case in point. It has been punching well above its weight in recent years, and all predictions that it has had its day have proved false. In 2010, the French firm had the third highest net flows of any European group, according to Lipper FMI figures, despite not even featuring in the table of top 25 European master groups by assets under management.

Winner firms such as Carmignac Gestion have, it seems, benefited from greater selectiveness – and caution – on the part of fund buyers in the wake of the global financial crisis.

“Global financial institutions and distributors since the financial crisis in a back-to-basics environment are selecting fewer strategic partners and even fewer products,” says Daniel Enskat, head of global consulting at Strategic Insight. “This mostly benefits large independent fund houses and, increasingly, selected investment boutiques.”

This trend towards “blockbuster products and an accelerating winner-takes-all phenomenon in the global asset management industry since the financial crisis” is in evidence across asset classes, investment styles and categories, according to Enskat. However, certain other unifying features can be identified among the winners.

“In addition to clear fund positioning/investment process and competitive performance – which a number of fund managers can demonstrate – blockbuster firms in almost all cases have highly visible fund managers, outstanding marketing and proactive communication,” he says.

©2011 funds europe