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IFAs set to take 60% of fund market by 2004, says survey

IFAs will account for almost two-thirds of the UK retail mutual funds market by 2004, according to a new report from research agency Cerulli Associates.

The 300-page report, analysing distribution in the UK market, predicts IFAs will dominate despite the proliferation of fund supermarkets.

IFAs currently account for around 51 per cent of new investment into British unit trusts but Cerulli believes this figure will be as high as 61 per cent in four years.

The report predicts fund supermarkets will account for at least 25 per cent of annual net new inflows to the market by 2004. But IFAs using supermarkets as back-office platforms through the likes of Cofunds and FundsNetwork, will also account for a healthy proportion of this market.

It forecasts that retail funds will eventually carry no front-end charge, with the UK unit trust and Oeic market doubling to over £555bn over the next five years.

Chase de Vere investment adviser Justin Modray says: “I think the IFA market will continue to grow because investors have become increasingly confused with the growing number of funds on the market.

“Although there are a lot more direct routes, many people who start out direct realise that after a year or two, they want to go to an IFA.”

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