The funds management sector represents $2.3 trillion in consolidated assets and is a key part of the Australian financial services sector, thus prompting ASIC to undertake a competition review of funds management.
Deloitte Access Economics was retained by ASIC to undertake an assessment of funds management competition in the context of outcomes being delivered to investors in retail managed investment products. As part of this review, Deloitte has issued an interim report for the purposes of soliciting feedback on key areas discussed in the report.
The report focuses on the following six areas:
- How fund managers compete to deliver value
- The features of a fund that make it competitive in its type/class
- How features are promoted or communicated to potential investors and what extent investors rely on these to make investment decisions
- How retail investors choose between fund managers and products
- The extent of correlation between fees charged and performance achieved; and
- How current market structures and regulations affect competition between fund managers.
The interim report has made some positive observations about the funds management industry in Australia, including that there is clear evidence of competition in the funds management industry and that fund management fees in Australia are some of the lowest in the world. The interim report also acknowledges that performance is only one aspect of value that investors receive when purchasing managed funds and that ‘historical performance alone should not be used to assess fund quality.
For those interested in finding out more about the Deloitte Competition in Funds Management Interim Report further, see here. Interested stakeholders wishing to make a submission can do so by 9 April 2021.
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