The downturn in regional markets and falling demand for mutual funds are expected to accelerate a consolidation in the US$100 billion industry, an expert has warned.
The most vulnerable companies have been hit by a slump in retail funds' net asset values without an institutional fund base to offset the downturn.
The funds under management of many trusts investing in regional economies have more than halved during the past six months as investors fled from local markets and values slumped.
Fund management ratings agency RCP & Partners managing director Shane Norman said: 'This will accelerate the trend to merger and consolidation. Some companies will go to the wall.' Many would be caught because they increased their costs during the first half when the outlook was bullish, he said.
According to the Investment Funds' Association, investors redeemed more than $82 million in funds in October.
Higher levels of redemptions from funds investing in regional economies were expected last month and this month.
