The report says that the increasing domination of consultants in the institutional market and the move towards open architecture in retail are the principal drivers behind the changes.
"The hurdle rate for critical mass is increasing, with those below Eu100bn particularly under pressure," said the report. "There is a new preparedness to seek co-operative ventures in order to share the costs of product platforms and extend access to distribution."
At one end of the fund management market, by 2010 a super-league of eight to 10 global fund managers with over $3tr under management is expected. At the other end, boutique firms, which argue that their small size allows them to be successful, are becoming popular. "Fund management houses in the middle are facing a strategic dilemma," said the report.
Open architecture, which is where fund managers sell other company's funds through their own distribution networks, is becoming increasingly important in Europe. The report says that the model is still immature but most institutions are preparing for a full open architecture environment.
Open architecture will favour the biggest asset managers, as they have well recognised brands and a variety of product which can be offered competitively.
Hawkpoint believes that because open architecture makes third party relationships more important, there is less reason for a financial services group to fully integrate its fund management divisions. "Finding ways to allow it to grow and develop third party relationships while keeping access to product and participating in the growth should become a priority," said the report.
There is therefore a growing case for financial services groups to seek separate listings for their fund management arms, in order to highlight their independence from the parent company.
JP Morgan Fleming Asset Management has promoted Amr Seif to vice president (product manager) within the European equity group.
Seif was previously a portfolio manager for Middle East funds in the asset manager's emerging markets group. He reports to Christian Elsmark, product director.
Before JPMF, Seif was chief investment officer at CIC Asset Management.