LUXEMBOURG (Reuters) - The subprime-driven market turmoil is likely to lead to simpler investment structures that can be priced more easily, the head of a leading fund services company told Reuters.
Even specialists struggled to find prices for complicated often asset-backed structures in a credit market that dried up, Thomas Seale, chief executive officer of EFA told Reuters ahead of a Funds Summit this week.
"This crisis will create pressures for independent pricing and also the simplification of structures," Seale said.
Seale said fund service companies, which carry out much of the administration for the industry, had not felt the full force of the market slide since August, although Seale said he remained "prudent".
"If the fund industry were to suffer then administration would follow. Yet as of today, I have not seen a slowdown in the number of fund projects, although we have seen a slowdown in activity within funds."
Seale said that companies such as his, that provide services to fund management firms and their investors, might notice a slowdown in the next 6 to 12 months.
EFA, Europe's largest independent fund services provider, handles around 120 billion euros of funds for over 140 fund management companies. It added 60 people last year and is looking for another 50 in 2008.
The industry as a whole suffered outflows in the second half of last year, but Europe's funds capital Luxembourg had a solid year as Asian investors and some in eastern Europe poured money in, notably buying EU-regulated UCITS.
Investors were maintaining an appetite for commodity funds, given the spike of a range of raw materials prices, much of it driven by Chinese demand.
"We continue to see interest in funds of hedge funds. The days of just creating a vanilla European equity fund are over," he said.
Increased complexity of funds and their wider geographic distribution should increase pressure for consolidation in the sector. Traditionally fund managers had their own exclusive back office in Luxembourg. Increasingly they are outsourcing such operations to players such as EFA.
(Reporting by Philip Blenkinsop; editing by Keith Weir)
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