Europe’s sub-advisory boom

The European sub-advisory market is growing at an “impressive” pace and already attracts 5.4% of today’s total European mutual fund and exchange-traded fund net inflows, a report said.

According to ‘European Distribution Dynamics 2018: Addressing a Shifting Landscape’, by Boston-based consulting firm Cerulli Associates, the European sub-advisory market currently amounts to approximately €480 billion.

Sub-advisory is growing at different rates throughout Europe. The UK is in the lead, with 37% market share, and the country hosts the region’s largest sponsor, St. James’s Place.

Italy has the second-largest share of the European market, 15% and it is also the fastest-growing sub-advisory market in the region.

Sub-advisory is less popular in markets such as Spain and Germany, where funds of funds are preferred.

Cerulli estimated that yearly net new flows to sub-advisory could be between €30 billion and €60 billion over the next few years.

Angelos Gousios, director of European retail research at Cerulli and lead author of the report, said: “Managers appreciate the fact that sub-advisory relationships tend to last longer – more than ten years in many cases.”

He added: “As long as the sub-advisor offers decent performance, it will tend to stay in the game. Although the fees are lower, the assets are stickier.”

©2018 funds europe

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