But Funds Seeking Market Share Will Face Challenges
The separate account industry is booming, with assets under management more than quadrupling during the past six years, but fund companies are likely to struggle gaining access to this market, according to a new report released today by Cerulli Associates, a financial research group based in Boston.
Assets held in separate accounts increased from just less than $75 billion at the end of 1994 to $275 billion by March of this year, the report said. Researchers expect that figure to surpass $650 billion by the end of 2005.
The study tracked 150 firms, mostly institutional managers who control 70% of the separate account business. It predicts mutual fund companies will have success in the separate account business, 'but will likely struggle in the short term as they grapple with thorny systems, portfolio construction and sales-force issues,' the statement said.
Researchers predict that funds will increasingly develop alliances with institutional managers who have little experience with retail models, but are familiar with the separate accounts business.