The common view is that more competition is good for the consumer. But a new report challenges that notion by suggesting that the sheer number of mutual funds – more than 35,000 in Europe – could be distracting investors from focusing on the long term.

The report, commissioned by the UK government and authored by Paul Cox, a finance professor at the University of Birmingham, involved in-depth interviews with around 30 organisations directly involved in the retail investment sector, including wealth managers, smaller stockbroking and private client firms, and independent financial advisers and planners. Cox found that "the number of funds available was widely seen as a problem", quoting figures from analyst Morningstar that said 36,500 funds in Europe hold securities from only about 3,000 issuing entities "of note", such as companies and governments.