Adding private market to its platform suggests 2024 will be a busy year for Fund Channel, which expects to double assets in the coming two years and further enhance its tech capability.
European financial regulators latterly invited retail investors to allocate a portion of their net-worth to sophisticated private markets investments through structures like the EU Eltif. But many individual investors may not appreciate this opportunity. For a start, comparatively little of their income makes it even into far less complex assets.
For policymakers, too much of household savings sits in bank accounts when it should be in investment funds and providing finance to the European economy. There is continued pressure on the financial services industry to act.
“We have ahead of us a dramatic challenge to address,” says Pierre-Adrien Domon, CEO of Fund Channel (pictured left), an award-winning B2B fund distribution platform. “Some 15% of individuals hold investment products, whereas in the US – which acts as a benchmark – the figure is 42%.”
Domon joined Fund Channel in 2009 and became CEO in 2020. Today, Fund Channel is a joint venture between Amundi and Caceis – respectively a fund manager and an asset servicer. Domon says the role of a platform intermediary in the transition of household savings is to reduce the complexity of distribution for fund managers and their distribution partners.
For nearly 20 years, Fund Channel has worked to drive operational efficiencies in the fund distribution chain for asset managers and fund selectors that operate in both the institutional and wholesale/retail segments of the industry. Regulatory fragmentation between the EU and the UK, and even within the EU itself, make distribution activities – such as KYC and anti-money laundering due-diligence tasks – highly complex and expensive.
Mutualising costs in the platform ecosystem
Launched in 2005, Fund Channel seeks to increase automation and straight-through processing for activities that exist between asset managers and fund selectors. This includes manager selection, compliance and reporting, and post-trade record-keeping.
The firm now supports intermediation between 600 management companies and 110 distributors that manage €401 billion of assets across a dozen countries in Europe and Asia.
Michaël Martineau, chief operating officer at Fund Channel (pictured below), says that actors in the investment funds market turn to platforms for operational needs. In the case of Fund Channel, this includes fund selection (there are some 115,000 ISIN codes on the platform), the creation of fund distribution agreements (and periodical reviews of these agreements), rebate management and a host of regulatory compliance tasks such as MiFID II product suitability requirements and ESG.
All services are accessible through one client agreement and the plethora of business-intelligence data that results from these activities – including dealing data and data on competitors – is available to clients through one portal.
Data services helped Fund Channel gain the distinction of ‘Best Platform in Europe’ for the second consecutive year at the Platforum Survey in 2023. The firm topped five out of six critical criteria including data services, value for money, efficiencies and overall services.
Data is a major focus for outsourcing projects because it is a powerful aid to growth. But behind this driver sits the broader problem of technology. Investment in tech is burdensome but inevitable because technology nowadays supports many fund management activities and offers the promise of increased efficiencies and lower costs.
“Already up to 30% of the Ucits market sit on platforms. As this happens, distributors will look to platforms to achieve efficiencies and cost-savings. Essentially, distributors are outsourcing their costs and mutualising their investments in the platform ecosystem,” says Domon.
Fund Channel’s platform offers the broadest range of products, including funds, hedge funds, ETFs and structured products. The suite extends to global model portfolios, which offer distributors and wealth managers the potential to enhance their product offering, including in the sub-advised space.
And if, as policymakers hope, a more ‘democratised’ private markets prevails, then Fund Channel has now entered this illiquid assets sector. In November, Amundi and Indosuez Wealth Management announced they had acquired a stake in AirFund, a French fintech that digitalises private markets flows, and would together market private asset funds. As part of the transaction, Fund Channel and AirFund made a strategic deal that sees Fund Channel also offering private assets exposure to its clients, backed by expertise from Amundi’s real assets team.
A deep dive into data
Martineau says: “The idea is we can take a deep dive with our clients into the data of each service, spanning front, middle and back offices. It will not only be web-based but also available through APIs technology.”
DIVER will go live in February and is also developed with Amundi and Caceis. Amundi is Europe’s largest asset manager and Caceis is an asset servicer with around €4.7 trillion of assets under custody & €3.3 trillion of assets under administration.
Further work will see Fund Channel expanding the availability of structured products and working towards ETF fractionalisation.
Innovation of this nature is what drives Fund Channel and some other platforms towards commanding an ever-larger slice of the distribution market. Distributors and fund manufacturers increasingly recognise the ‘utility’ nature of platforms and their important role in the digital transition of the funds industry.
But what makes Fund Channel itself unique is its heritage, says Domon.
“Assets are increasing across B2B fund platforms but we believe that a distinguishing factor for us is that we emerged from a partnership between an asset manager and an asset servicer. This makes us incredibly well-positioned to provide off-the-shelf investment solutions to clients as well as, the strong reputation and recognition the Credit Agricole group holds.”
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