THE Australian funds management marketplace is being increasingly dominated by the top five fund managers, who now control 67 per cent of the total market by size.
TheAssirt Market ShareReportfor the December quarter 2002, released last week, shows these managers, comprised of the four major banks and life insurer AMP, 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 because of 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 report, with the 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 billion.
Assirt says this slight boost to the size of the market was largely due to improved returns from global and domestic shares.
Despite the growth in the last quarter, Assirt says the market still declined over 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 flow of money into the sector for the calendar year coming in at $11 billion, 40 per cent lower than net inflows in the calendar year 2001.
Assirt says most of the top managers in the market share report remained stable in size over the quarter.
The largest inflows reported for the quarter were forING Australia, driven by over $500 million flowing into one of ANZ’s short-term money market funds as well as significant inflows into ING’s OneAnswer master trust product.
The Commonwealth Bank-ownedColonial First Statealso showed significant increase in fund flows compared to the previous quarter, according to Assirt, due to strong flows into its FirstChoice master trust, which reported net inflows of over $700 million for the quarter.
