Some 49% of managers said the market was slightly saturated while 37% said it was very saturated. Only 14% of managers said that it was not a problem at all.
In addition to the excess number of funds most managers said that funds were too similar. Some 58% of managers agreed with the proposition that funds in European are not well spread over different investment styles.
On a more positive note there was some confidence in the ability of open architecture – where fund groups distribute the funds of third parties – to help resolve thi
s problem. Some 58% said it was a little likely to succeed in Europe while 39% said it was very likely.
However, despite the overcrowded market most fund groups are still launching funds. Some 76% of groups said they had already launched funds so far this year.
Market risk
More generally fund groups are expecting a slight rise in markets over the next 12 months. Almost half said global stockmarkets will be 5-10% higher in 12 months’ time. Another quarter expected a rise of 10-15% while 7% predicted a rise of over 15% and 16% expected one of 0-5%.
Managers are most optimistic about the Asian market outside of Japan with 34% expecting it to be the best performer over the next 12 months. This was closely followed by the USA which 30% said would be the best performer. Japan was expected to be the worst market by 43% of the panel.
From a sectoral perspective the most favoured area was financial services with 26% of managers saying it would perform best. The least favoured was consumer goods which 21% said would be worst.
Morningstar’s European offices conducted the survey from June 11th-19th. Some 61 fund groups from 12 countries participated. On average they managed €53 billion (£37 billion) each and offered 86 retail funds.
