Fund supermarkets in Germany 2007

Fund supermarkets in Germany 2007 examines developments in the German fund supermarket sector and assesses the distribution channels that are in operation. The report analyzes both the current and possible future trends of the industry.
Report Highlights

Research conducted by Datamonitor in 2007 found that while there was limited impact of supermarkets in terms of trades from individual customers, IFAs and asset managers were making increased use of these online platforms. Fund supermarkets operating in the German market offer a broad mix of investment funds in all asset classes, with some platforms' portfolios extending to in excess of 6,000 domestic and international funds. In addition, a number of supermarkets have diversified their services. Intense competition sees German fund supermarkets offering investors deep discounts on front-end loads for investment funds. Some hosts even waive these fees altogether. These discounts also put pressure on fund managers who are distributing through commercial and savings banks.
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OVERVIEW 1
Catalyst 1
Summary 1
EXECUTIVE SUMMARY 2
Germany's fund supermarket sector continues to expand to meet the demands of a growing potential customer base 2
Germany's retail mutual fund market reflects strong growth 2
Recent legislation on collective investments supports product innovation and enhances investor protection 2
Direct banks are among the leading fund supermarkets 2
Fund supermarkets are expanding beyond their traditional business activity 2
MARKET BACKGROUND 6
Germany's retail mutual fund market reflects strong growth 6
Germany's mutual fund industry is worth EUR1,263 billion 6
DISTRIBUTION DYNAMICS 9
Retail banks dominate the distribution of mutual funds 9
Close to half of all mutual fund assets under management is attributed to retail banks 9
Fund supermarket clients demand control and accessibility 9
REGULATION 11
Recent legislation on collective investments supports product innovation and enhances investor protection 11
Asset management companies may establish unit classes within funds 11
Upcoming EU legislation (UCITS directive and MiFID) facilitates market development and enhances consumer protection 11
MiFID allows fund managers and distributors improved flexibility, but also introduces new obligations 11
The planned revision of the Investment Act will relax regulatory restrictions 12
DISTRIBUTOR PROFILES 13
Direct banks are among the leading fund supermarkets 13
Comdirect offers one of the broadest fund ranges 13
Pricing keeps pace with the competition and helps build customer relationships 14
Comdirect serves both B2C and B2B markets 14
Services extend to banking and advice 14
DAB bank focuses on the retail market 14
Despite its retail emphasis, DAB also facilitates intermediary trading 15
DAB also delivers banking and adivce 15
Cortal Consors markets to individual investors 15
Investors have access to banking products and services 16
FondsDISCOUNT.de serves the needs of experienced private investors 16
FondsDISCOUNT competes strongly on price 16
The product range extends beyond investment funds 17
Competition is reducing fees for investors 17
DISTRIBUTION STRATEGIES 18
Fund supermarkets are expanding beyond their traditional business activity 18
Branding is as important to fund supermarkets as it is to end investors 18
Fund supermarkets are pursuing growth by offering banking services and investing in bricks and mortar 18
Intermediaries will require dedicated services and enhanced platform capability 19
Marketing aimed at both individual investors and intermediaries should emphasize the concept of partnering for growth 19
Leading supermarkets are helping intermediaries to grow their businesses 20
Fund managers will continue to rely on direct sales, although supermarkets represent a key element of heir distribution strategies 21
Demographic shifts, alternative investment structures and cost-driven technological advances will impact fund supermarkets' growth 22
Population shifts and a more engaged investment market will help sustain growth 22
Structured products offer fund supermarkets opportunities for further diversification 22
Investment in technology can boost both revenue and profit 23
APPENDIX 24
Data 24
Definitions 27
Asset manager / Asset management company 27
Bank 27
Collective Investment Scheme 27
Exchange-Traded Fund 27
Fund of funds 27
Fund supermarket 28
Hedge fund 28
Non-retail market 28
Retail market 28
Structured products 28
UCITS 28
Methodology 29
Further reading 29
Ask the analyst 29
Datamonitor consulting 29
Disclaimer 29
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Table 1: Comparative overview of selected German fund supermarkets 13
Table 2: Total mutual funds under management segmented by investor, EURm, 2002-2006 24
Table 3: Retail savings & investment asset balances, EURm, 2002-2006 25
Table 4: Retail mutual funds under management segmented by type of fund, EURm, 2002-2006 26
Table 5: Total mutual fund assets segmented by distribution channel, Dec 2006 27


Figure 1: Retail investors account for an increasing proportion of mutual funds in Germany 6
Figure 2: Mutual funds represent one-fifth of household portfolios 7
Figure 3: Balanced funds and bond funds together account for over half of household mutual fund portfolios 8
Figure 4: Retail banks dominated Germany's mutual fund sector in 2006 9
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