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Fund firms want more supermarket start-ups

Fund managers are calling for more IFA fund supermarkets, claiming that providers and intermediaries would benefit from more competition.

Fidelity&#39s FundsNetwork and Cofunds have dominated the IFA fund supermarket race, with only Skandia providing serious competition.

While the direct market has been saturated with new entrants, Legal & General and Norwich Union are the only providers to have any plans to break into the IFA supermarket arena.

But both of the potential life company entrants have indicated that their supermarkets will have a limited bestof-breed selection of funds, which has proved to be contrary to IFA demand.

Schroders and Invesco Perpetual believe the success of IFA supermarkets demonstrates that there is room for new entrants. Invesco Perpetual chief executive Mike Webb says the three major players already provide a high degree of competition but that more competition can never be a bad thing.

Schroders director Robin Stoakley says: “If you look at the growth of supermarkets, I think it is clear that assets are growing much quicker than the direct side. Most fund managers embrace the supermarket concept and, therefore, we would welcome more competition.”

Webb says: “Competition in any market is good because it forces best practice, innovation and competitive pricing.”

But Skandia investment brand manager Phil Morse says: “I cannot see that more competition would make much difference. When you go to the provincial IFAs, they are going to go for one supermarket and stick with it. Frankly, I think 10 or 12 would not survive.”

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