Competition in managed funds - interim report

Analysis

Competition in managed funds - interim report

The effectiveness of competition

The Australian Securities and Investments Commission engaged Deloitte Access Economics to assess competition in the Australian managed funds industry. This report presents interim findings regarding competition in managed funds, focusing on outcomes for retail investors. It seeks comments from industry stakeholders.

Update: Deloitte Access Economics has since released the Final Report (September 2021) which is available on the ASIC website.

Managed funds are an integral part of Australia’s financial services sector, representing $2.3 trillion in consolidated assets. These assets are managed on behalf of governments, private institutions, and individual investors. Individual Australian households directly represent around 6% of the industry by holding managed funds in personal investment portfolios and indirectly around 50% through institutional superannuation.

With over 300 fund managers offering more than 3,700 products, investors have a wide range of options to choose from. This range of products supports a variety of investor preferences over features such as risk and asset class. Fund managers primarily compete to attract and retain clients by providing the highest possible risk-adjusted return for a given fee.

However, few retail investors access funds directly since the funds management industry is highly intermediated. Financial advisors and online portals (platforms) serve as gatekeepers to accessing retail investors.

This report looks at the effectiveness of competition in the managed funds industry, by examining its structure, conduct and performance. In doing so, the analysis seeks to identify any indicators of market power or exclusionary conduct.

The Interim Report does not find significant evidence to suggest that competition is not effective in the managed funds industry. However, the Interim Report identifies some areas where concerns have been raised, or where outcomes might be improved.

This Interim Report is informed by a combination of research, econometrics, consultations and an industry survey. Further data and input from industry is needed to inform the final report.

On this basis, Deloitte Access Economics welcomes and encourages industry to comment on the findings, methods and areas of further investigation that are identified in this report.

Submissions can be made to the email address.

Submissions will not be published in full. However, Deloitte may choose to quote and attribute submissions. Stakeholders may mark their submissions commercial-in-confidence, in whole or in part, where they would prefer non-attribution.

Published: March 2021

Competition in managed funds - interim report
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