Allfunds has signed an agreement with DBS to become the provider of access to third-party mutual funds for its wealth and retail banking businesses, according to a press statement.
The Madrid-headquartered bank offers around 84,860 funds from 1,550 fund managers to customers worldwide. Outside its core Europe market, it has a presence in the Middle East, South America, and through its Singapore office which it opened in 2016, a growing Asia business.
“We look forward to simultaneously striving towards our goal of expanding further in Asia and supporting DBS with their own growth ambitions in the region,” said Juan Alcaraz, CEO of Allfunds in the statement.
Earlier this year, Pierre DeGagné, Singapore-based head of fund selection at DBS Private Bank, told FSA that only one-third of the 280 funds (out of a total of 700 approved funds) covered by his team were positively recommended.
Qualitative factors, in particular the track records of individual fund managers and an assessment of their ability to outperform in the future, are a key part of the screening process, he said.
However, now “Allfunds presents a one-stop solution for [its] distribution needs – access to an extensive fund eco-system, leading technology proposition, and a full suite of servicing capabilities,” said Marc Lansonneur, head of managed solutions, balance sheet products and investment governance at DBS Wealth, in the statement.
DBS’s expansion of its funds offering has most recently included a hybrid robo-advisory product that invests in ETFs, which was first offered to DBS’s private banking clients in March, and then rolled out to Singapore retail investors last month.
Research firm battle
Allfunds also offers fund research, data and analytics resources, competing with firms such as FE Analytics, in which private equity firm Hg bought a stake last year, and also US-based Morningstar
Morningstar recently announced that it had changed its analyst rating methodology to reflect the fees charged by the different share classes of the same funds. Basically, the share classes with higher fees will be penalised, and a pro-forma review of existing funds by Jeffrey Ptak, global director at Morningstar Research, found that downgrades would outnumber upgrades by two-to-one.
In September Morningstar argued that the power of bank distributors inflates mutual fund costs in Hong Kong and elsewhere in Asia, reiterating a criticism of fees that it forcefully made in 2016 when it highlighted the negative impact of high charges on fund performance.