Top fund managers tighten grip on industry
The Australian funds management market place is being increasingly dominated by the top five fund managers, who now control 67 per cent of the total market by size.
TheAssirtMarket Share Report for the December quarter 2002, released today, shows that these managers, comprised of the four major banks and life insurerAMP, have increased their share from 53 per cent of the market a year ago.
Assirt says this significant increase in market concentration could have serious implications for investors, as these groups could have trouble generating additional excess returns in the future due to the large asset bases they have amassed.
The research house puts the increasing domination down to a recent spate of funds management acquisitions and joint ventures by each of the banking groups.
The report reveals no change in the ranking of the top 10 fund managers, thoughBT’s consolidation within Westpac has meant an asset total of $25 billion, compared to the $16 billion reported last quarter for Westpac and the $10.6 billion for BT.
Net fund flows into the industry have been weak over the December quarter according to the Assirt report, with the recorded figure of $1.1 billion being 39 per cent down on the September quarter 2002 and 71 per cent down on the corresponding quarter in 2001.
As a result, the retail managed funds market grew only slightly, up two per cent from $230.7 billion at end of the September quarter to $236.0 billion.
Despite the growth in this quarter, Assirt says the market still declined over the calendar year 2002, having started the year with $236.4 billion.
The research house says investors clearly curtailed their investments into managed funds in 2002, with the total flows for the calendar year standing at $11 billion, 40 per cent lower than the net inflows over the calendar year 2001.
AUTHOR
Recommended for you
Pendal has told investors it will start winding up its Enhanced Credit fund from December, its third fund closure this year.
A potential acquisition of Platinum Asset Management by Regal Partners will be beneficial for the “challenged” fund manager, believes Morningstar, but it has warned fund management mergers don’t always run smoothly.
Fund managers made a “big shift” into bond-sensitive sectors like utilities in September and away from cyclicals, while risk appetite is at an 11-month low.
Ahead of the RBA’s upcoming monetary policy meeting next week, BlackRock Australasia has reaffirmed the market’s view that rate cuts are likely out of the picture for 2024.
