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Third-party distribution of long-term mutual fund & ETF assets reaches USD8.8trn in Q1 2014

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Total third-party long-term mutual fund and exchange traded fund (ETF) assets under management (AUM) totalled USD8.8 trillion in the first quarter of 2014, according to new data released Broadridge’s by Access Data.

This figure surpasses the total for the fourth quarter of 2013 by 3.3 per cent and is an increase of 12.6 per cent from the first quarter of 2013,.

According to data released on Broadridge's Fund Distribution Intelligence tool, the independent channels – independent broker-dealers (IBDs) and registered investment advisers (RIAs) – continue to lead as the largest distribution channels for long-term mutual funds and ETFs. While the IBD channel has experienced the largest increase in assets over the past year, the RIA channel had the largest increase in assets during the first quarter of 2014.  Specifically, data for the first three months of 2014 shows: 

• IBDs led in overall third-party distribution of long-term mutual funds and ETFs with USD2.1 trillion AUM, a 4 per cent increase over Q4 2013 and a 16.9 per cent increase over the same time period in 2013

• The second largest channel was RIAs with USD1.7 trillion in fund and ETF AUM (a 4.2 per cent increase over Q4 2013 and an 8 per cent increase over the first quarter of 2013), followed by the wirehouse channel with USD1.6 trillion (a 2.5 per cent increase over Q4 2013 and a 7.3 per cent increase over the first quarter of 2013)

• Total AUM for retail third-party distribution – independent, RIA, wirehouse, discount – of long-term funds and ETFs represents USD5.64 trillion, or 64.2 per cent of all third-party distribution

• The institutional channels – private banks, national banks and trust companies – had combined AUM of USD3.14 trillion, or 35.8 per cent of third-party distribution

Broadridge has also released today a new whitepaper titled: "The RIA Channel – A Roadmap for Driving Growth," that highlights the success of the RIA channel and its emergence as the second largest distribution channel, which now accounts for more assets, in aggregate, than the top four wirehouse firms. With the RIA channel's expanded importance comes a number of unique challenges in reaching this market due to its more fragmented structure versus traditional distribution channels. In order to be successful in this channel, ETF and mutual fund executives need a more tailored distribution strategy with advanced segmentation and specific targeting of individual advisors.

"In the first three months of the year, our data showed that the overall shift toward the independent retail channels continues as IBDs and RIAs outpaced wirehouse firms in the distribution of long-term mutual funds and ETFs. Wirehouses remain a large and expanding channel, but the continued success and growth of the RIA channel, which experienced the biggest increase in assets of any third-party distribution channel in the first quarter of 2014, is an important trend to recognise," says Frank Polefrone, Senior Vice President, Access Data. "Cost effectively targeting RIA firms can be a challenge as they vary significantly in scale and approach making a one size fits all sales plan ineffective.  We're working with our clients to assess the financial intermediaries driving growth and empowering them with the tools to develop an effective action plan to propel their overall business expansion.”

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