European Mutual Funds Distribution 2004

TABLE OF CONTENTS
CHAPTER 1 EXECUTIVE SUMMARY 4
Overview 4
France 4
Germany 5
Spain 6
Italy 6
UK 7
Fund distribution: a pan-European overview 8
CHAPTER 2 INTRODUCTION 17
What is this report about? 17
Who is the target reader? 18
How to use this report 18
CHAPTER 3 MARKET CONTEXT 20
Introduction 20
European overview 20
Market size 20
Distribution landscape 21
Regulation and key issues 23
France 27
Market size 27
Distribution landscape 28
Regulation and key issues 32
Key competitors 36
Germany 38
Market size 38
Distribution landscape 39
Regulation and key issues 44
Key competitors 48
Spain 50
Market size 50
Distribution landscape 51
Regulation and key issues 56
Key competitors 58
Italy 59
Market size 59
Distribution landscape 60
Regulation and key issues 65
Key competitors 68
UK 69
Market size 69
Distribution landscape 70
Regulation and key issues 73
Key competitors 76
CHAPTER 4 FUND DISTRIBUTION: A PAN-EUROPEAN VIEW 79
Introduction 79
Fund manager selection 79
Service offering 89
CHAPTER 5 THE FUTURE DECODED 95
Introduction 95
France 95
Germany 97
Spain 98
Italy 100
UK 102
European overview 105
CHAPTER 6 APPENDIX 107
Supplementary data 107
Market context 107
Fund distribution: a pan-European view 110
Research methodology 118
Further Reading 118
Datamonitor Global Wealth Service SPP: Reports 118
Datamonitor Global Wealth Service SPP: Insight Reports 118
Datamonitor Global Wealth Service SPP: Competitor Tracking 119
Datamonitor Savings & Investments SPP Reports 119
Datamonitor Financial Services Consulting 120
SPP writing team 120

LIST OF TABLES
Table 1: Example of fee disclosure required under French simplified prospectus, June 2004 36
Table 2: Best mutual fund providers in France, 2004 37
Table 3: Best mutual fund providers in Germany, 2004 49
Table 4: Best mutual fund providers in Spain, 2004 58
Table 5: Best mutual fund providers in Italy, 2004 68
Table 6: Total value of European retail mutual funds by country, 1998-2002 107
Table 7: Total value of French retail mutual funds, 1998-2002 107
Table 8: Distribution of French mutual funds by channel, 2003 108
Table 9: Total value of German retail mutual funds, 1998-2002 108
Table 10: Distribution of German mutual funds by channel, 2000-2002 108
Table 11: Total value of Spanish retail mutual funds, 1998-2002 109
Table 12: Distribution of Spanish mutual funds by channel, 2003 109
Table 13: Total value of Italian retail mutual funds, 1998-2002 109
Table 14: Distribution of Italian mutual funds by channel, 1998-2003 110
Table 15: Total value of UK retail mutual funds, 1998-2002 110
Table 16: Distribution of UK mutual funds by channel, 1998-2003 110
Table 17: Proportion of funds distributed by banks that are third party 111
Table 18: Proportion of banks offering designated number of third party providers 111
Table 19: Method of mutual fund provider selection 112
Table 20: Important attributes when selecting a fund provider - banks 112
Table 21: Important attributes when selecting a fund provider - financial advisors 113
Table 22: Effects of the downturn on mutual fund provider selection 113
Table 23: Most likely reasons for terminating a relationship with a mutual fund provider 114
Table 24: Frequency for choosing a fund provider 114
Table 25: Number of requests for proposal (RFP) over the last two years 115
Table 26: Most important aspects of service provided by fund provider - banks 115
Table 27: Most important aspects of service provided by fund provider - financial advisors 116
Table 28: Services that banks would like to have online 116
Table 29: Services that financial advisors would like to have online 117
Table 30: Services that retail customers would like from a mutual fund provider 117


LIST OF FIGURES
Figure 1: France remains the largest retail mutual fund market in Europe having experienced the strongest growth since 1998 21
Figure 2: The French mutual fund market was larger in 2002 than in 2000 27
Figure 3: Banks have secured 80% of retail mutual fund distribution in France 29
Figure 4: Germans have shown far greater interest in mutual funds compared to 1998 39
Figure 5: Banks have become increasingly dominant in the distribution of mutual funds in Germany 41
Figure 6: Spanish investment in mutual funds has been poor since 2000 50
Figure 7: Banking networks dominate Spain’s mutual fund distribution, 2003 52
Figure 8: The popularity of mutual funds in Italy is declining 60
Figure 9: Banks are the top mutual fund distributors in Italy 61
Figure 10: The value of UK mutual funds remains above the 1998 level 70
Figure 11: UK mutual fund distribution has become increasingly dominated by the IFA network 71
Figure 12: While two thirds of European banks offer less than 10 external mutual fund providers, the tendency is towards a greater number of distribution alliances 80
Figure 13: A bank’s preference is the most important factor in selection 81
Figure 14: Performance is the most critical factor for banks when selecting fund providers 82
Figure 15: Fees and reputation play an important role for financial advisors when selecting a mutual fund provider 84
Figure 16: The market downturn has reinforced the need for performance 85
Figure 17: Distribution agreements are most likely to end as a result of poor performance and service 86
Figure 18: Banks are far less reactive to market movements than financial advisors 87
Figure 19: The number of requests for proposals have generally remained the same over the last two years 88
Figure 20: Mutual fund valuation and performance data are critical for banks 90
Figure 21: Support from the fund provider is more critical for advisors than for banks 91
Figure 22: Online transaction capabilities are critical for banks 92
Figure 23: Retail customers are strongly looking for valuations and performance data from mutual fund providers 94