Table of Contents
Issues in the Market
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- Main issues
- Product background and definitions
- Simplifying the market
- Risk profile is key
- Specific types of Collective Investments
Insights and Opportunities
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- Education key
- A need to appeal to new investors
- Leverage opportunities
- Continue to exploit the available product options
Market in Brief
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- Key points
- 2006 – a good year for the fund managers…
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- Figure 1: Gross retail and ISA sales of collective investments, 1997-2006
- …but there are problems ahead
- Education and advice to come to the fore
- Sales follow the equities market
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- Figure 2: Net collective investments and ISA sales against the FSTE 100 index, 1992-2007
- Product penetration remains low
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- Figure 3: Consumer holdings of selected investment products, June 2007
- Little appetite for risk
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- Figure 4: Consumer appetite for risk, June 2007
- Competitor products could be hit by the credit crunch
Fast Forward Trends
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- Generation Game
- What's it about?
- What we've seen
- Implications
- What’s next?
- Universal Uncertainty
- What's it about?
- What we've seen
- Specifics
- What’s next?
- Totophobia
- What's it about?
- Specifics
- What’s next?
Internal Market Environment
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- Key points
- Market performance drives sales…
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- Figure 5: FTSE 100 monthly close, 1982-2007
- …but still little appetite for risk
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- Figure 6: Barriers to investing in shares and other stock market based investments, September 2007
- The FSA and the Retail Distribution Review…
- …spells yet more change for the investment industry
- Hopes for more transparent charging structures
- More demanding environment for advisors
- Green funds potentially over inflated
- Star managers add personality to the investment market
- Emerging markets to engage consumer interest?
Broader Market Environment
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- Key points
- An ageing population
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- Figure 7: UK population trends by age group, 2004-29
- Attitudes towards saving
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- Figure 8: PDI, consumer expenditure and the savings ratio, 1997-2006
- Rising interest rates may keep people in non equity and bond savings
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- Figure 9: Bank of England base rate, 1997-2007
- Consumer confidence is ebbing
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- Figure 10: Rolling monthly, three-monthly, and yearly UK consumer confidence indices*, Jan 2000-Sept 2007
- Marked shift in saving intentions
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- Figure 11: Intentions to save and spend in the next 12 months*, Jan 2001-Sept 2007
Competitive Context
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- Key points
- Buy-to-let – are the wheels about to come off?
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- Figure 12: Number and value of buy-to-let mortgages outstanding, 2000-07 (H1)
- A-day boosts sale of pensions
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- Figure 13: Individual pension sales, 2001-06
- ISA sales continue to grow, but average subscriptions fall
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- Figure 14: Number of new mini cash ISAs and amounts subscribed during the year, 1999/2000-2006/07
Strengths and Weaknesses in the Market
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- Strengths
- Weaknesses
Who’s Innovating
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- Key points
- Innovation comes from fund selection
- The industry moves to meet interest in ethical funds
- Regulatory changes expand investment scope
- Funds of Funds
- Property funds
- Hedge funds to enter the retail landscape?
- Platforms
Trade Perspective
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- View of the market
- The IFA still rules the roost
- Cultivating the intermediary
- Products – some sign of innovation
Market Size and Forecast
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- Key points
- Sales approach £60 billion in 2006…
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- Figure 15: Gross retail and ISA sales, December 1997-December 2006
- …but net sales to fall back in 2007?
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- Figure 16: Net retail and ISA sales, December 1997-December 2007
- How long before churn becomes a major issue?
- New products to slow the investment merry-go-round?
- Strong growth in assets under management
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- Figure 17: UK domiciled funds under management by asset class, 1997-2006
- Retail sales still centre around the ISA season
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- Figure 18: Gross and net ISA sales, July 2005-June 2007
- Figure 19: Market value of funds in ISAs, 2006-07
- Forecast
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- Figure 20: Gross retail sales of collective investments, 2002-12
- Will the ‘boom’ turn into a ‘pop’?
- Background factors less favourable
Market Share
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- Key points
- Retail funds under management
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- Figure 21: Retail funds under management, by fund manager, August 2007
- Halifax tops the ISA tables
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- Figure 22: UK ISA funds under management, August 2007
Companies and Products
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- Key points
- Product sales reflect wider market conditions
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- Figure 23: Sector trend within collective investments, 2001-07
- Fidelity is longer the lone front runner
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- Figure 24: Fidelity and Invesco Perpetual fund assets under management, October 2005-August 2007
- Ratings provide key point of differentiation
Brand Communication and Promotion
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- Key points
- Press spend continues to dominate
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- Figure 25: Collective investments, adspend by media type, 2003-07(June)
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- Figure 26: Adspend by company, 2002-06
- Current themes
Channels to Market
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- Key points
- Intermediaries see the only real growth
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- Figure 27: Retail distribution of collective investments, 1997-2006
- Direct sales to the fore in the ISA market
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- Figure 28: Collective investment ISA sales distribution, 1999-2006
- Fund supermarkets take a growing share of the market
- Platforms
The Consumer – Product Ownership
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- Key points
- Collective investments a niche product
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- Figure 29: Investment ownership, June 2007
- Money follows money
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- Figure 30: Investment ownership, by gender and socio-economic group, June 2007
- Implications and opportunities
- A missed opportunity?
- How to tempt the young to save?
- Taking the longer view
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- Figure 31: Investment ownership, by lifestage, June 2007
- …and capitalising on the Child Trust Fund
- Low-cost, low-hassle ISAs?
- Owning and renting
- Take a punt on the Internet…
- … or just stick to the financial pages?
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- Figure 32: Investment ownership, by daily newspaper readership, June 2007
- Extending the good grocery brand
The Consumer – Attitudes to Risk and Advice
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- Key points
- Professionals, not friends, the key source of advice
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- Figure 33: Source of financial advice, 2003-07
- Older and more affluent go for IFAs
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- Figure 34: Preferred sources of investment advice, by gender, age, socio-economic group and marital status, June 2007
- …and many still banking for advice
- Friends and family are very important
- Implications and opportunities
- Affluent using on and offline media
- Mortgage holders go pro
- Maximisers choose the IFA route
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- Figure 35: Advice source by risk, June 2007
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- Figure 36: Sources of advice, 2003-07
- Scope for online growth?
- The Internet – just a useful extra?
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- Figure 37: Repertoire on sources of advice when considering investing money in the stock market or other medium risk opportunities, June 2007
- Implications and opportunities
- Still safety-first for savers
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- Figure 38: Attitudes towards saving and investing, June 2007
- Minimal tolerance for risk
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- Figure 39: towards saving and investing, by gender, age, socio-economic status, marital status and lifestage, June 2007
- Implications and opportunities
- More young people could be saving and investing
- Broadsheet readers prepared for greater risks
- Age/lifestage
- Socio-economic groups
- Other
- Even the risk tolerant steer clear of equities
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- Figure 40: Product ownership, by risk tolerance, June 2007
The Consumer – Targeting Opportunities
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- Key points
- It’s all about the guarantees
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- Figure 41: Important factors for long term investing, June 2007
- Fear of loss
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- Figure 42: Most important factors for long term investing, by socio-demographic group, June 2007
- Implications and opportunities
- Affluent look for tax benefits
- Implications and opportunities
- Other
- Returns come to the fore for the well-informed
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- Figure 43: Factors people consider important when thinking about saving or investing money over a longer period of time, by number of sources of advice used, June 2007
- Implications and opportunities
- 1 IFA Informed (15% of respondents)
- 2 Bank Backing (26% of respondents)
- 3 Non-investors (39% of respondents)
- 4 Friend and Family Fortunes (9% of respondents)
- 5 All Available Resources (10% of respondents)
- Taking a punt on the IFA
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- Figure 44: Target groups by attitudes towards saving and investing, July 2007
- Implications and opportunities
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- Figure 45: Target groups, by number of sources of advice used, June 2007
- Implications and opportunities
- Age/lifestage
- Socio-economic
- Other
Detailed Demographics
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- Figure 46: Most popular source of financial advice, by socio-demographic group, June 2007
- Figure 47: Next most popular attitudes towards sources of advice, by socio-demographic group, June 2007
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- Figure 48: Target group demographics, June 2007
- Figure 49: Investment ownership, by age, June 2007
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- Figure 50: Investment ownership, by income groups, June 2007
- Figure 51: Investment ownership, by tenure, June 2007
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- Figure 52: Investment ownership, by region, June 2007
- Figure 53: Investment ownership, by technology, June 2007
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- Figure 54: Investment ownership, by Internet usage, June 2007
- Figure 55: Investment ownership, by supermarket usage, June 2007
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- Figure 56: Investment ownership, by age/socio-economic groups, June 2007
- Sources of advice
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- Figure 57: Most popular source of financial advice, by socio-demographic group, June 2007
- Figure 58: Attitudes to risk, 2007
- Figure 59: Next most important factors for long term investing, by socio-demographic group, June 2007
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- Figure 60: Influencing investment decisions, 2007
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