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‘Reel in the minnow funds’

Advisers want investment firms to focus on rationalising their fund ranges rather than look for new niche products to offer the market.

Research by Money Marketing, in conjunction with Financial Express, has found that nearly 500 retail funds in the UK have less than £10m in assets, raising questions over their efficiency.

Hargreaves Lansdown senior analyst Meera Patel says some ranges include numerous funds that overlap and do not hold significant assets to be profitable in the long term.

She says: “We have supported small funds as they look to capture growth but it is when they have been around for some time that questions do need to be asked.

“A number of firms are guilty of this such as JP Morgan, Threadneedle, New Star and Fidelity, to name a few. Invesco Perpetual has the right idea in merging its US and UK funds to give them suitable scale and attractiveness.”

Informed Choice director Martin Bamford says it would be great to see firms consolidating struggling funds. He says: “Size of funds was one of the factors in our recent LemonAid report as we feel that funds lacking size do not benefit anyone typically. Many of these funds are not very popular and one of the issues we found was that almost one-third of funds on the list which we knew were small in size would not divulge the exact amount held.”

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