Mainland European asset managers have “fragmented fund ranges with few, if any, flagship funds”, according to Fitch Ratings.
Of 12,000 cross-border funds just 3.5 per cent - or 430 - have more than €1bn in assets, with large funds dominated by UK and US asset manager. Aymeric Poizot, a managing director in the Fitch fund and asset manager rating group, says: “These managers have benefited from their expertise in global products, emerging markets and fixed income, where flows have concentrated in the recent years, as well as their active cross border distribution strategy.”
According to Fitch, fewer but larger funds allows asset managers more efficient administration, reporting, controls and related support functions.
“Portfolio managers can also focus on fewer funds and spend less time on administrative and commercial tasks, allowing them to spend more time on portfolio management,” it adds.
“Commercially, flagship funds are also more visible, can accommodate bigger investor tickets and serve more easily as benchmarks when fund managers promote their portfolio management.”
However, it warns the presence of flagship funs can increase reliance on a single track record, management team or star manager. It can also expose the asset manager to greater business risk if the asset class or strategy fail or the manager leave.