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L&G sets up &#39best of breed&#39 supermarket

Legal & General is to enter the fund supermarket war with a direct and IFA offering to rival Fidelity and Cofunds.

The new platform, which will be launched in September, will see fund managers vie to offer a “best of breed” selection of funds, with around six funds per sector.

The funds will be selected by Legal & General, based on past performance, strength of brand and IFA and consumer opinion.

It will be the first to move away from the traditional supermarket model, which looks to offer users as wide a selection of funds as possible. The company says although many IFAs want choice, there is also strong demand for a more simple supermarket which does not overload users with information.

The supermarket is looking to launch with between 50 and 75 external funds as well as L&G&#39s entire unit trust range. It may add to this total in the future.

The supermarket will be both online and paper-based and will be available to L&G&#39s distribution partners, including Barclays, Alliance & Leicester and Northern Rock as well as IFAs.

The technology for the platform is being developed by the Bank of New York and is based on the Rufus administration system.

L&G says the service will initially offer just funds but it will consider expanding to encompass life and pension products in the future.

Managing director of unit trusts Michael Hayden says: “The feedback we have been getting is that there is an information overload on fund supermarkets. We are trying to get some of the noise out of the sectors. There are a lot of funds out there which are pretty me-tooish. We are looking for the funds which have the broadest appeal to advisers and clients.”

Fidelity says it welcomes competition. Marketing director David Cowdell says: “We know from the US that the supermarkets which straddle both the IFA and direct market are the most successful.”

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