Insight October 2009 Monthly Update

In October 2005,we took a closer look at the delivery paradigm for mutual funds and decided it was time for a new conceptual framework. The key modification was separating the traditional “retail” channels from the emerging “institutional” distribution opportunities,including insurance company group savings platforms,segregated funds,fund wraps,and market-linked notes (or principal-protected notes). Four years later, our most recent measurement of the mutual fund holdings across all channels confirms that many fund companieshave embraced—by necessity and by design—multi-channel distribution strategies. Reaching advisors, mutual fund-licensed sales personnel, and investors through a full array of channels is in; the concept of channel conflict is out. The October Trend Lines article examines fund wraps ,which, during the past decade, took centre stage in a key transformativeevent in the funds industry: the shift from individual fund product sales to packaged investment solutions. As distributors, individual advisors and investors embraced the fund wrap concept, financial services providers moved to capitalize on this growth opportunity. Three constituencies have emerged as drivers of growth in the fund wrap segment: banks, independent fund companies, and insurance companies.