New Research: Multi-series Fund Structures – Welcome to Mass Customization

July issue of Insight updates our in-depth examination of the retail multi-series universe, monitoring the asset growth and pricing trends in an increasingly fragmented mutual fund industry. We examine the ingredients of the “alphabet soup,” followed by individual capsules for each series and a look at the development of hybrid sub-series’ that combine aspects of two or more fund series.

The ongoing development of multiple fund series is a reflection of the fund companies’ desire to provide distinct pricing options to address distinct distribution opportunities. Assets in the non-core-series have grown consistently faster than A-series (also referred to as the original series) both over the long and short term. Yet the overall pool of money into the multi-series remains limited at $65 billion (excluding institutional series) or 8% of industry assets. While this suggests that the original one-size-fits-all pricing model still dominates the Canadian fund industry, recent years have witnessed acceleration in the usage of non-traditional series. Notably, after a decade of modest progress, the coin appears to be finally dropping for the F-series, thanks to a combination of repricing actions—aimed at better aligning the series’ price point to the higher-end nature of the fee-based brokerage clientele—and sharper marketing focus on the part of its sponsors. Also on the move is the new breed of high net worth series—a reflection of the fund companies’ and advisors’ desire to conquer and retain the coveted high end segments.