Asset managers have not held back on bringing new funds to the market, despite the industry being forced to steer through a spate of regulatory and market issues.
For the Investment Association’s Global sector, Liontrust Asset Management found 33 funds have been launched in the past three years, taking the number of funds in the sector to 277.
Of these, just 10 were equity income funds.
Liontrust’s head of multi-asset John Husselbee said this was surprising giving the search for income has been the “golden theme of the day”.
If we haven’t got something to sell then we launch something. John HusselbeeSpeaking to FTAdviser, Mr Husselbee said demand might be driving some fund launches, but said a lot would also be down to the fund industry’s fixation on growth.
“Fund management is a growth industry; people can’t sit still and tread water and say enough is enough. If we haven’t got something to sell then we launch something.”
He added: “There is always a fine balance between asset management and asset gathering.”
The regulatory focus on active managers has intensified after the Financial Conduct Authority criticised the industry for its weak price competition, while passive funds have been rapidly gaining traction in the popularity stakes.
The merger of fund management giants, such as Standard Life and Aberdeen, has also prompted questions about whether there will be a “rationalisation” of funds if similar strategies are merged together.
Speaking to FTAdviser, Mr Husselbee said: “For a long time we have been talking about consolidation, not just among fund management groups, but also funds as well."
Mr Husselbee said it was likely there could be less funds offered by these asset management giants once they have merged.
This echoes a point made by Nucleus’s head of business development Barry Neilson, who said it was likely there would be a rationalisation of funds going forward.
The business development boss also said fund groups need to move away from offering as many funds as possible in the hope that a few would have good performance at one time.
Mr Husselbee said that by having lots of different funds, firms can smooth their profitability, but he said it was fair criticism that fund groups need to avoid being all things to all men.
Peter Lowman, chief investment officer at the Investment Quorum, said he thought it was likely some funds would disappear after the mergers, but that new funds would also launch.
He pointed out, for example, that mergers could cause some boutique firms to pop up as managers decide to leave the “big brother-style” fund management groups.
Pointing to the income fund launch figures, Mr Lowman said is was surprising given the thirst for income, but suggested it could be linked to some funds being reclassified because of the difficulty meeting the income criteria.
The investment chief also questioned whether some fund groups might be struggling to find managers with the right expertise to run income funds.
katherine.denham@ft.com
