There is a lot of room for improvement of European mutual fund companies' websites, according to Top 10 European Websites - Mutual Funds, a new report by kasina, an electronic-commerce consulting firm in New York that specializes in mutual funds. The report examines European market trends and conditions that have an effect on online fund investing and critiques fund websites, listing the top 10.
The report is the first of its kind, according to kasina.
"The Web is on the verge of becoming an important medium for fulfilling the increasing demand for mutual funds in Europe," according to the report. Earlier this year, Forrester Research of Cambridge, Mass. reported that 300,000 European users already track their investments over the Web. However, Internet usage differs dramatically from country to country. The United Kingdom and Germany are the biggest online markets in Europe, with 19.4 million and 18 million users, respectively. These numbers, however, represent a small percentage of the general population. Scandinavian countries have a much higher percentage of the general population online, with over 50 percent, according to the report. Still other countries, like France and Spain, for example, have seen slow movement to the Internet, with 15.2 percent and 11.2 percent of their populations online, respectively, according to the report.
Besides the disparity in online users, several other differences among European countries affect online investment sites, according to the report. Investment strategies vary from country to country. Some investment products that are popular in one country, may not be in another, like real estate investment trusts, which account for nearly 25 percent of the total fund assets in Germany, but which have little popularity elsewhere in Europe, according to the report. A varying concentration of fund assets in certain countries and, of course, different languages are other factors that complicate the European environment, according to the report.
Only 600 of 1000 European fund companies have websites, according to the report. kasina, narrowed their analysis to 178 of these and determined the top 10 based on such aspects as content, online servicing, and usability.
The top 10 sites belong to: Banque et Caisse D'Epargne de L'Etat of Luxembourg (www.bcee.lu), Chase Fleming Asset Management of Romford, England (www.chaseflemingam.co.uk), Credit Suisse of Zurich, Switzerland (www.credit-suisse.ch), Deutscher Investment-Trust of Frankfurt, Germany (www.dit.de), DWS Investment of Frankfurt, Germany (www.dws.de), e-Cortal of Paris (www.e-cortal.com), Fidelity Investments-UK of London (www.fidelity.co.uk), Investec Asset Management of London (www.investecfunds.co.uk), SicavOnline of Paris (www.sicavonline.fr), and UBS Investment Funds of London (www.ubs.ch).
With the exception of these websites, the majority of the sites reviewed lack important features, according to the report. Less than half describe their company's investment process and only about 62 percent provide basic fund profiles. Only 12 percent provide online account applications or a broker-referral system.
"These omissions demonstrate a lack of commitment to the overall sales process," according to the report. "Without a fund profile, investment decisions online are extremely difficult for investors."
The majority of the sites are struggling with content, which is the most important category, according to kasina. Most sites do not provide daily market news or any kind of investment research. Even basic fund information such as updated fund prices, fund managers, top holdings and investments by sectors is omitted from most of the sites, according to the report.
"While this lack of detailed information may be the result of lax compliance standards regarding disclosure in Europe, if these sites would only provide their potential investors with more information and details, fund companies might enjoy deepened investor trust and reap the benefits of heightened credibility," according to the report.
Weaknesses exist with regard to online servicing as well. The number one reason for investors to frequent' a mutual fund site is to check account balances, according to kasina. Only 15 percent of the European sites provide this feature, compared to 42 percent of US sites, according to the report. Also, few sites offer more than one language option.
The report outlines these and other problems with the sites in detail and recommends ways to improve them, such as producing more localized content, using a content management system, and providing value-added features, such as investor education and personalized advice. In the discussion of the strategies for the sites, the report warns of using standard U.S. approaches.
"...use of U.S. Web strategy will not necessarily lead to success in this new, highly fragmented and complex European market."