European sub-advised fund assets see record growth

Europe’s sub-advised fund assets have experienced their highest six-monthly growth since preparations for the introduction of MiFID 2 heralded a structural shift towards sub-advisory two years ago, according to the latest analysis from instiHub.

The first quarter of 2019 saw assets grow by 13 per cent after declining by 6.4 per cent during Q4 ’18. This is the highest growth since instiHub’s records began at the end of Q4 ’16, driving the industry, comprising over 2,600 mandates awarded by over 170 sponsors in 17 selection markets to more than 580 sub-advisers across the globe, to a new record. During the first half of 2019, the UK, Sweden, and Italy performed above average – replaced during Q2 by Switzerland, the Netherlands, and Spain.
 
Andreas Pfunder, CEO and founder of instiHub, provider of the leading and most comprehensive sub-advisory data platform, adds: “Sub-advised fund sizes have grown tremendously in 2019. Net three new sponsors have entered the industry with new programs, adding EUR3.5 billion in new money. We already know of at least one more who will enter with billions worth of funds. Such dynamics create great opportunities for proactive asset managers.”
 
instiHub expects growth in sub-advisory to continue over the medium term. With more transparent cost disclosure being forced by regulators, value creation for investors moves into the foreground. The sub-advisory model is an ideal solution to achieve this, both from an access to best talent as well as cost perspective.
 
“Some fund-of-funds will be very exposed and need to rethink their structures. I can see a future where fund-of-fund sponsors and discretionary managers resort to large building blocks that are set up specifically for such clients on a sub-advised basis. Some of the large consultants such as Mercer, specialists like ABN AMRO Investment Solutions, or multi-boutiques like Nordea are ideally based to accommodate the needs of fund-of-fund allocators who don’t have the bandwidth to undertake full manager due diligence themselves,” says Pfunder.