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Rating:Mutual Fund M&A Activity to Remain Strong Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, November 08, 2016

Mutual Fund M&A Activity to Remain Strong

Reported by Katy Golvala

The mutual fund sub-sector has seen an increase in deal activity in Q3 of 2016, and that won't be changing any time soon, according to a recent PwC report.

US Asset and Wealth Management Deals insights Q3 2016, released at the end of last month, reports that the traditional asset management industry experienced an 80% increase in deal volume, with nine deals announced in Q3, versus five deals in Q2. PwC attributes the rise in deal volume to moves from active to passive strategies.

Sam Yildirim
Partner, US Asset Management M&A Leader
To see a full list of this year's deals, visit MFWire's Deal Sheet.

Moving forward, the key driver of consolidation will be the DoL ruling, says Sam Yildirim, partner and global leader of asset management at PwC, who spoke with MFWire. Given that retirement assets are the key targets of the DoL changes, distributors will be looking to streamline the offerings on their platforms.

"A wirehouse has 10,000 names, but it could easily go down to 5,000 or less. And this is happening already, but it is taking some time to implement," says Yildirim.

Yildirim explains that this will exacerbate the movement towards passive strategies, particularly at the lower end of the investment market, where it is difficult to justify why the strategies are in the best interest of the customer. This isn't for lack of performance, though. While plenty of mutual funds are performing well, it will take a higher level of effort on the parts of asset managers to partner with distributors to prove that working with their funds is in the best interest of their clients.

And with that, the debate about consolidation activity rages on. Just last week, MFWire highlighted a conversation between Marty Flanagan and the Wall Street Journal, where Flanagan cast doubt on predictions of an impending M&A frenzy. It seems like fundsters will just have to wait and see what the future holds for the industry. 

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