Has the impact of the Retail Distribution Review (RDR) finally reached the boardrooms of some of the UK’s biggest asset managers?

The past few months would indicate it has, with a raft of mergers and acquisitions in the space.

Not only has fund giant Schroders bought Cazenove for £424m, making it one of the largest asset managers’ in the UK, we’ve also seen some smaller deals that have seen the ownership of PSigma Asset Management and OPM Fund Management change hands.

City Financial bought OPM Financial, a specialist multi-asset provider, in April, while Miton purchased PSigma Asset Management for £13m earlier this month.

In a recent article, PSigma AM co-founder Ian Chimes said he made the deal principally because he felt the company was too small to compete in a post-RDR world.

Should we be expecting more of the same? Given that revenues are likely to be falling post-RDR it seems there will be plenty of similar deals in the pipeline.

If we are going to see a consolidation of the number of funds in the UK, it makes sense for the same thing to happen in terms of the number of groups.

Who are the targets?

If you look at the latest monthly company rankings from the Investment Management Association, for total retail funds under management, of the 97 asset managers listed, only 55 have more than £1bn in assets under management. Now, not all of the remainder are targets but if a strong bid comes in for a business you can bet that heads will turn.

Don’t forget that many foreign investors are also interested in getting into the UK fund space and this may be the best avenue to get a foothold.

There will always be demand for boutiques that offer specialist investment capabilities, such as Japan, Europe, Africa, but many run of the mill operations, which offer a standard product range that will not stand out from the big boys are under threat. The question is whether they can stand the heat in a post-RDR world for too much longer?