Some members are excited for retirement, while others approach it with a “real sense of shame and fear”. Funds are going to have to figure out how to cater to both groups or risk failing them all.
If there’s one lesson for investors from the past five years, it’s that chopping and changing their strategy – even in the face of massive market turmoil – doesn’t always pay.
APIR enhances ‘utility’ status as funds still mushroom
APIR, the long-time provider of identifiers for managed funds, is enhancing its role as a utility in the funds management industry. It’s not an easy role to perform, but it’s an important one. And managed funds are not shrinking in number, as you’d otherwise suspect.
According to Chris Donohoe, the chief executive at APIR, the privately held business, is widening its capabilities. It’s enhancing its role as a provider of data services to the wholesale funds management industry. It is looking to, for instance, provide the whole industry with data breakdown of the aggregate number of investment products and identify underlying trends.
Donohoe says that while it may seem counter-intuitive, the trend is towards continued growth in the number of investment products across the industry, the main ones still being unlisted unit trusts. While the funds management industry has whinged about supporting too many funds over the years, it has, as a whole, done little about addressing the problem. The number of unlisted unit trusts has continued to grow.
Notwithstanding the continued growth in the traditional unit trust managed funds area Donohoe says, there has also been a lot of growth in the closed-end fund space over the last few years, such as property trusts. This does not include the listed market of LICs and LITs – both managed and passive.
Donohoe says: “We’ve had 29 new participants in the market in the past 12 months, from about 330 to 359. In the previous full year, the increase was around 33. There continues to be strong product growth in the traditional managed funds area.” He says that APIR has changed the way it prices some products, to make them more accessible for specific product types, such as closed-end funds.
“In terms of the types of products, there has been continued growth in our core traditional managed funds, which is counter-intuitive. We’ve had about 300 new registrations just in the past six months.”
A particularly strong area of growth is in the ‘Legal Entity Identifier’ (LEI) area. This includes corporate trusts and other such legal entities, APIR has registered approximately 2.300 LEIs since late 2015.
Donohoe says there are about 13,000 products in active circulation and probably double that number of unused products that APIR still keeps data on. That’s been a fairly constant number for the past five-or-so years, he says. The total number of managed fund products has remained fairly static, notwithstanding manager attempts to reduce their number.
Another area of potential growth for APIR is the ‘Asia Region Funds Passport’ initiative, being supported locally by the Financial Services Council. Donohoe says that the legislation, passed in 2018, still needs some support, given that Asian investors are typically not attracted to Australian trust structures. The introduction of the ‘CCIV’ (Corporate Collective Investment Vehicle), which is simpler, akin to the European UCITs structure, should give that long-awaited development a nudge along.
– G.B.
