Regulation hits fund product innovation – Cerulli

Innovation in Europe’s fund industry is suffering in the ongoing environment of regulatory change, according to research and consulting firm Cerulli Associations in its latest edition of its European research.

The Cerulli Edge – Europe Edition points to other factors such as limited space on platforms, industry consolidation and “saturation” in certain asset classes as also contributing to challenges. There are, however, mixed messages in terms of exactly how regulation is impacting the ability to innovate.

Angelos Gousios, director, European Retail Research, at Cerulli, said: “The FCA, the UK’s financial regulator, has been at pains to suggest that some asset managers have taken short cuts on the product design process, eschewing client interests in favor of products that are easily managed. The retort from managers is that regulation is inhibiting innovation and could eventually lead to unduly restricted choice.”

“Managers want to innovate, but are constrained by regulation that does not encourage or reward risk-takers because of the understandable focus on protecting the investor.”

In the area of alternative products, Cerulli’s research suggests that in the next three years, some 84% of managers plan to “beef up their resources in absolute return products”. About a third plan to focus more on private debt, long/short risk premia, and property and infrastructure debt.

In other expected changes, the respondents surveyed for Cerulli’s latest report point to growing use of subadvisers in the next couple of years, to support “customisation”.


Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

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