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&#39IFAs set to dominate UT distribution until 2005&#39

IFAs will remain the dominant distribution channel for unit trusts until at least 2005 despite fierce competition from direct and internet providers, according to research commissioned by Datamonitor for FundsHub.

The research shows IFAs&#39 share of distribution will remain constant over the next few years, slipping slightly to 60.2 per cent in 2005 from 61 per cent in 2000, while direct channels, including mail, phone and the net are forecast to increase their market share strongly in the years to 2005, capturing 22.3 per cent in 2005 compared with the current 14.3 per cent.

In particular, the role of fund supermarkets is likely to become increasingly important in the distribution of mutual funds.

Funds supermarkets will be much to blame for the rise in direct distribution but their rise will mostly be at the expense of tied agents. This channel will see a fall in market share to 13.5 per cent in 2005 from 19.8 per cent in 2000, according to the findings.

FundsHub chief executive Mark Lund says: “This research confirms how powerful IFAs are in the distribution of mutual funds in the UK while funds supermarkets will be eating away at tied agents business.”

Hargreaves Lansdown head of research Mark Dampier says: “This comes as no surprise to me. In fact, I think IFAs&#39 domination will increase as more and more people realise that getting advice is the natural way for them to go.”

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