Which few firms won 95% of all mutual fund flows?

May 23, 2011

Strategic Insight says only 0.3% of globally available fund products took in the entirety of net inflows in Q1.

Most people are familiar with the 80/20 rule, which says 80% of the spoils go to just 20% of an industry’s leading participants.

For mutual funds, it’s the 80/20 rule on amphetamines.

According to Strategic Insight, in 2010, 95% of total net cash flows to long-term mutual funds (ie, not counting money market funds) went to just 0.5% of registered products. In the first quarter of 2011, the trend was even more pronounced, with just 200 funds, or 0.3% of the world’s total (out of more than 70,000 funds) receiving 100% of net inflows.

The first quarter of 2011 recorded $210 billion in net cash flows, while in 2010, the figure was $850 billion.

Strategic Insight argues that much of this comes down to branding and being famous for particular asset classes.

It sets out a few basic categories that have just a handful of well-known established brands. In equities, the shortlist includes Fidelity, Schroders, JP Morgan, Aberdeen and First State. In bonds, it includes Pimco, BlackRock, Franklin Templeton, JP Morgan, Aberdeen, AllianceBernstein and Permal.

The emerging-markets space hosts brands such as Schroders, HSBC, Franklin Templeton, Blackrock, Aberdeen and JP Morgan. And in Asia, brands include Aberdeen, JP Morgan, First State, Prudential Asset Management and Permal.

Beyond these very big global names, however, Strategic Insight says specialist boutiques are now claiming the lion’s share of flows in their respective areas, thanks to the burgeoning interest among private banks and institutional investors for core/satellite allocations.

These boutiques include Carmignac (global equities), Bluebay (corporate bonds), Skagen (emerging market equities), Pacific Heights (multi-asset), DoubleLine Capital (mortgage-backed securities), Huashang (China A shares) and Value Partners (Greater China equities).

Daniel Enskat, head of global consulting at Strategic Insight, says the data confirms a trend toward blockbuster products and an accelerating winner-takes-all phenomenon in the global asset-management industry following the 2008 financial crisis.