The UK’s asset management houses are expected to cut down their fund ranges in the coming years as they strive to improve efficiency, according to forecasts by Ernst & Young.
The EY ITEM Club’s latest outlook for financial services highlights a number of challenges that could hold back growth in assets under management despite a rise in equity markets.
EY ITEM Club asset management partner Gill Lofts notes that the stock market recovery has helped asset managers offset the downward pressure on fees coming from sources such as rivalry from passive funds, regulatory demands and investor pressure.
However, she argues the likelihood of flatter equity markets and persistently low interest rates will impact fund managers’ ability to grow their AUM and cause them to rethink business models to preserve their profitability.
She says: “Fund closures are not a novel idea but asset managers are showing a new willingness to rationalise their product range. This attitude not only reflects the threats to profitability but also the limited availability of seed capital.”