The UK retail investment ind-ustry will not be able to sustain the rising number of fund supermarkets in the long term, according to a report by Datamonitor.
The market analyst says the number of fund supermarkets will increase to 20 from 16 by the end of the year as companies including Legal & General, Norwich Union and JP Morgan Fleming enter the fray.
But it claims the market could buckle under the strain as it is unlikely that demand will grow fast enough.
Datamonitor says supermarkets most under threat are those which do not have the backing of big companies and have low customer numbers and assets under management.
It believes supermarkets offering products to direct investors could also lose out as Datamonitor expects the business to business channel to become the leading source of revenue for fund supermarkets in the next five years.
Analyst and report author Darren Oliver says: “The fund supermarket industry is experiencing greater competitive pressures as new players enter the market.
“Yet it is not possible for the market to sustain such a high number of supermarkets as the market will not grow fast enough.”