Roy Morgan Research has conducted over 34,000 interviews during the 12 months to February 2010 with holders of managed funds (including superannuation) which indicate that the threat to competition in the managed funds industry posed by the takeover of AXA by NAB has been overstated. The reason for this is the narrow focus on the retail investment platforms rather than the entire managed funds market.

Recent reports in the press and in the ACCC press release indicate that the rejection of the proposed takeover of AXA by NAB was largely based on concerns relating to retail investment platforms and the concentration of market power that would result. As approximately only one third of the managed funds market is covered by these platforms it is more appropriate to consider the implication of the takeover across the entire funds management market (including superannuation).

In the 12 months to February 2010, the NAB had a 6.1% share of the funds management market followed by CBA (6.0%), AMP (5.9%), Westpac (5.3%), ANZ (3.3%) and AXA (2.3%). These major players combined only accounts for 28.9% of the market with the bulk of the remainder coming from industry funds, Government funds and self managed funds. To exclude these major competitors from any analysis of the takeover appears inappropriate as most of the competition is effectively “retail” funds from the consumer’s point of view.


Market Share of Funds Management — Australia


Source: Roy Morgan Research, 12 months to February 2010, n = 34,504.

The above chart shows that the market share for a combined NAB/AXA would rise to 8.5%, which is almost identical to a combined AMP/AXA result of 8.2%. Either way there is a little impact on overall funds management competition.

Another issue raised by the ACCC was that the merger of NAB and AXA would mean a lessening of competition for investors with “complex investment needs." Roy Morgan has examined the top quintile in the managed investment market (based on 7,900 interviews) and found that this group accounts for around 70% of the funds under management (and therefore could be regarded as having more “complex investments needs”) but would also be impacted only marginally by a merger as shown by the following market shares amongst this group.


Market Share of Funds Management — Top Quintile*


Source: Roy Morgan Research, 12 months to February 2010, n = 7,896.
* The top 20% of holders of wealth managed products (including superannuation) based on total value held.

The above chart shows that if NAB purchased AXA it would still only have 8.6% of the managed funds held by the top quintile group, only a little ahead of the AMP/AXA share of 7.6%. The real competition in this group is from industry funds, government funds and self managed funds, apart from the large number of smaller providers.


Norman Morris, Industry Communications Director, Roy Morgan Research, says:

“The analysis of the competitive threat posed by the takeover of AXA in the funds management industry by either the NAB or AMP appears to be too reliant on the analysis of retail investment platforms rather than looking at the full impact on the managed funds consumers. There will still be strong competition from industry funds, self managed funds and others if this takeover goes ahead.

“A major issue that needs to be addressed in this industry is more to do with the potential influence that the ownership of financial planners (the main users of retail investment platforms) has on product selection.

“The Roy Morgan Research “Superannuation and Wealth Management in Australia Report" has consistently shown that planners owned by major fund managers direct over 70% of their clients superannuation funds to their own products.”

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