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Over 700 funds holding less than £30m

Three out of 10 funds in IMA sectors hold less than £30m in assets, the level that most managers regard as the minimum for the average economical fund.

A total of 733 out of the overall 2,450 funds fall below the £30m level but the firm says the overall figure is probably bigger as many smaller funds have not disclosed their size.

Skandia fund manager Ryan Hughes says £30m is generally regarded as an economical fund size and funds below that level could be in danger of closure.

He believes that companies could merge or close funds in the next few years.

But OPM Fund Investment chief investment officer Tony Yousefian feels some smaller fund firms can keep funds economical below the £30m mark as they have lower costs.

Hargreaves Lansdown senior analyst Meera Patel says: “There are still too many funds being run and if they are inefficient they are likely to be closed in the future. Some are specialist or family funds but the majority are probably costing too much to run and that cost burden is probably ending up with the investor.”

CandidMoney.com founder Justin Modray says: “If economies struggle, we are bound to see more closures and mergers in fund ranges.”

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