RIAs Continue Driving Mutual Fund Growth

Independent broker/dealers and RIAs continued outpacing wirehouse firms in long-term mutual fund asset growth in the first quarter, according to Access Data and Strategic Insight. 

Long-term mutual fund assets distributed by independent/regional broker/dealers (IBDs) and registered investment advisers (RIAs) continued to grow at a faster pace than the wirehouse channel in the first quarter of 2013, according to data released by Access Data and Strategic Insight, an Asset International company.

Accelerated growth for the independent distribution channels versus wirehouse channel was first identified by Access Data earlier this year when the firm released a study showing the IBD and RIA channels adding assets under management at twice the rate as the wirehouse channel. During the first quarter of 2013, the trend continued, with mutual fund assets in the IBD and RIA channels increasing 9% and 8%, respectively, compared to the wirehouse channel, which experienced a 6.5% increase during the quarter.

According to Access Data’s Market Intelligence data, first-quarter 2013 long-term mutual fund assets under management at IBDs and RIAs rose to $1.54 trillion and $1.24 trillion, respectively, compared with $1.41 trillion and $1.15 trillion in the fourth quarter of 2012.

The wirehouse channel accounted for $1.20 trillion in the first quarter, compared with $1.13 trillion in the previous quarter. 

“RIAs and IBDs continue to be a driving force behind the growth of retail mutual fund sales, demonstrated by the increase of mutual fund assets under management in these channels at the end of the first quarter of 2013,” said Frank Polefrone, senior vice president of Access Data.

Fund firms can more effectively utilize sales and marketing resources to accelerate growth of assets under management with a better understanding of which channels drive growth, Polefrone said. “We’re seeing our mutual fund and ETF clients take notice of the accelerated growth in the RIA and IBD channel and, as a result, put more dollars toward reaching these channels,” he said.

As investor confidence improved, net flows to stock and bond mutual funds set an all-time quarterly flows record at $193 billion during the first quarter of 2013, according to Avi Nachmany, executive vice president and director of research at Strategic Insight.

“Independent advisers were key contributors to this growth, as independent/regional broker/dealers brought in an estimated $43 billion of net inflows to long-term funds in the first quarter and RIAs deposited an additional $26 billion,” Nachmany said. “As the scope of adviser-sold fund distribution continues to expand, the distribution data transparency offered by Access Data, combined with analysis from Strategic Insight, has been widely adopted and has become essential in helping our clients formulate both strategic and tactical action plans, and identify the best growth opportunities by channel, distributor, and product type.”

The data also revealed that California, Colorado, Massachusetts and New York are the top states in rank order of assets under management (AUM) by RIAs of long-term mutual funds and exchange-traded funds (ETFs). These states represent more than 40% of total mutual fund and ETF AUM by RIAs.

Access Data’s Market Intelligence provides fund firms with a complete industry view, tracking more than 90% of long-term mutual fund and ETF asset positions and net flows. The offering calculates market share by channel, intermediary and product, performs peer group comparisons and analysis by Morningstar category, and estimates market penetration across multiple data sets, all the way down to the firm and office location.

Access Data Corp., a Broadridge Financial Solutions company, offers mutual funds and ETFs exclusive insight into assets and net flows to pinpoint the best opportunities in fast-growing market segments. More information is available at their website.

Strategic Insight provides research on the mutual fund industry and business intelligence.