Funds Management

Australia


Australia has one of the largest and fastest growing funds management sectors in the world. As of 31 March 2012 the Australian managed funds industry had $1,869.5 billion funds under management. Its growth is strengthened by Australia’s government-mandated retirement scheme, superannuation, which was introduced in 1992 and is set to increase gradually from 9 per cent to 12 per cent of salary by 2019-2020.

Wide variety of providers


There are over 130 investment management firms operating in Australia, as well as approximately 200 smaller hedge and boutique fund managers. The top 30 investment management firms control over than 85 per cent of the industry’s funds under management.

The three largest investment management firms in Australia, by way of Australian sourced funds under management as at September 2011 are Colonial First State Global Asset Management, State Street Global Advisors Australia, AMP Capital Investors Limited. Colonial First State Global Asset Management has $91 billion of Australian-sourced funds under management and holds 6.7 per cent of market share. State Street Global Advisors Australia has $79 billion and holds 5.8 per cent of market share and AMP Capital Investors Limited has $76 billion with 5.5 per cent of the market. Other investment management firms that make up the top ten by way of market share are MLC Investment Management, QIC Limited, Macquarie Banking Group, Vanguard Investments Australia Limited, OnePath Australia Limited, Blackrock Investment Management (Australia) Limited, Victorian Funds Management Corporation.

Of the total industry assets under management, two-thirds are sourced from wholesale investors, such as pension funds and insurance firms, and one-third from the retail investor market. The retail investment management market is dominated by large domestic institutions with 23 out of the 30 largest retail fund managers of local origin. Total unconsolidated assets of these domestic companies were almost A$390 billion, accounting for around 90 per cent of the retail market. Boutiques and Hedge Funds also make up part of Australia’s investment management industry.

Boutiques


Boutiques are typically investment firms established by an individual or small group of experienced managers who focus on a particular investment strategy or niche, often charging performance fees. There are over 200 boutique investment management firms in Australia, with at least 100 fund products offered in the Australian equity market alone. The largest boutiques include Perennial Investment Management, Platinum Asset Management, and Maple Brown Abbot, and are increasingly regarded as large institutional investment management firms.

Hedge funds


Hedge fund managers are either established by boutiques or by financial institutions. Hedge fund assets under management reached US$29 billion in December 2009, with Australia and Hong Kong the leading hedge fund markets in the region, excluding Japan. More than 80 per cent of Australia’s hedge fund assets are deployed in markets outside the country. As at December 2010 the following Australian fund managers were ranked within the world's top 500 largest money managers according to total assets under management in U.S. millions; Macquarie Bank Group, Commonwealth Bank Group, AMP, NAB/MLC, QIC, Westpac/BT, Industry Funds Management, Perpetual, Challenger Financial, Perennial Investment, Platinum Asset Management, Maple-Brown Abbott, Insurance Australia Group, Charter Hall Group, Balanced Equity Mgmt. Lend Lease, Northcape Capital, JCP Investment Partners, Paradice Investment.

Sources of information:
1.ABS cat. No. 5655.0, Managed Funds, Australia, March 2012: MARCH KEY POINTS
 
2.Australian Trade Commision: Investment Management Industry in Australia, 2010. Pg 10. 

3.Rainmaker: Australian-sourced FUM of Australian entities, as at September 2011

4.Australian Trade Commision: Investment Management Industry in Australia, 2010. Pg 11 

5.Australian Trade Commision: Investment Management Industry in Australia, 2010. Pg 12

6.The P&I/Towers Watson World 500, World's largest money managers, 2010.

Latest Videos


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4 Apr 2017

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26 Aug 2016

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29 Jul 2016

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17 Jun 2016

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26 May 2016

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20 May 2016

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22 Apr 2016

Securing diversification through Global Property with Presima

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1 Sep 2015

Positive outlook for equities

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13 Aug 2015

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13 Aug 2015

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7 Aug 2015

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15 Jul 2015

Diversification through global infrastructure

21 Jul 2015 - Redpoint Investment Management, Senior Portfolio Manager, Alex Stephen outlines how diversified investing in global infrastructure has the potential to generate consistent returns.

19 Jun 2015

Investing in a stock pickers market

07 Ju1 2015 - Antares Small Companies Fund Portfolio Manager Paul Dewar discusses how the fund is investing in a stock pickers market.

19 Jun 2015

Surprising stocks that yield returns

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19 Jun 2015

Selectively contrarian stock picking

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19 Jun 2015

Strategic investing in property stocks

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15 Jun 2015

Global property growth looking strong

18 Jun 2015 - Presima Global Property Securities Concentrated Fund, Portfolio Manager, Marc-Andre Flageole discusses the benefit of a global REIT fund.

1 Jun 2015

Navigating bond market challenges

09 Jun 2015 - Antares Income Fund Manager Tano Pelosi discusses the fund’s strategies for navigating bond market challenges.

1 Jun 2015

Small cap equities market opportunities

03 Jun 2015 - Fairview Equity Partners Executive Director and Portfolio Manager, Leigh Cronin outlines opportunities in the small cap equities market.

14 May 2015

What do lower rates mean for investing?

20 May 2015 - Northward Equity Income Fund CEO and Sector Portfolio Manager, Darren Thompson explains how the fund is investing with the key cash rate at a record low.

2 Apr 2015

Navigating the stock market noise

07 Apr 2015 - Pengana Australian Equities Fund Senior Portfolio Manager Rhett Kessler provides an update following reporting season.

21 Nov 2014

Opportunities for long term investing

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4 Dec 2014

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11 Nov 2014

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31 Oct 2014

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27 Oct 2014

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27 Oct 2014

Identifying stocks with growth prospects

06 Nov 2014 - Fairview Equity Partners Executive Director & Portfolio Manager Chris Adams outlines how the fund identifies stocks with growth prospects.

23 Sep 2014

Tiptoeing around time bomb sectors

03 Oct 2014 - Pengana Australian Equities Fund Senior Portfolio Manager, Rhett Kessler discuses stocks and why caution is now required around several potential time bomb sectors.

19 Sep 2014

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16 Jul 2014

June quarter stocks to watch

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20 Jun 2014

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16 Jun 2014

Selecting high yield Aussie shares

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14 Apr 2014

Generating returns without market relative risk

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31 Mar 2014

Sector specialist with tilt towards oil & gas

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21 Mar 2014

Equity income fund delivering in all markets

02 Apr 2014 - Northward Equity Income Fund Portfolio Manager, Darren Thompson discusses the portfolio's structure and performance on the fund's third year anniversary.

31 Mar 2014

The benefit of peer review and being selective

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17 Feb 2014

Global REITs to rebound in 2014

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28 Oct 2013

Ausbil optimistic on corporate activity

28 Oct 2013 - Ausbil Director of Equities John Grace speaks to FNN about the fund manager’s performance post reporting season and the positive outlook for corporate activity over the next 12 months.

18 Oct 2013

Northward makes most of large cap market

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14 Oct 2013

Pengana’s investment strategy delivers returns

17 Oct 2013 - Pengana Capital Australian Equities Fund Senior Portfolio Manager Rhett Kessler speaks to FNN about the fund's performance to date and why its investment decisions are delivering solid returns.

2 Oct 2013

Australian Ethical achieves top ranking

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9 Sep 2013

Fairview outperforms benchmark

09 Sep 2013 - Fairview Equity Partners Executive Director & Portfolio Manager, Chris Adams gives FNN an update on the fund’s performance and details its best and worst performing small cap stocks.

13 Jun 2013

Income with less volatility

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14 Jun 2013

Aus Ethical eyes principled investments

14 Jun 2013 - Australian Ethical’s Chief Investment Officer David Macri speaks to FNN about how the fund identifies ethical investment opportunities that deliver returns.

26 Oct 2012

Small cap round up and outlook

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24 Oct 2012

Navigating the European debt crisis

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15 Oct 2012

Opportunities in the AUD fixed interest market

15 Oct 2012 - Antares Fixed Income Portfolio Manager, Mark Kiely provides a forecast for Australian interest rates and outlines opportunities in the AUD fixed interest market.

4 Oct 2012

Generating income in uncertain times

04 Oct 2012- Northward Capital CEO & sector portfolio manager, Darren Thompson and portfolio manager, John Moore discuss how the Northward Equity Income fund generates income in uncertain times.

21 Jun 2012

Corporate versus Government debt

20 Jun 2012 – Antares Fixed Income Portfolio Manager, Andrew Rivers looks at the relative strength of corporate and government debt in Australia versus other parts of the world and explains how Antares Fixed Income adds value.

19 Jun 2012

Australian Bonds prices at record highs

14 Jun 2012 – Antares Fixed Income Investment Manager, Ken Hyman talks about the situation today of “financial repression” brought on by central banks driving down government bond yields, the outlook for the next 12 months and the "safe haven" investment approach of Antares Fixed Income in these challenging times.

1 Jun 2012

Equity and income to bolster returns

01 Jun 2012 – Northward Capital’s, portfolio managers, Darren Thompson and John Moore discuss the launch of their Equity Income Fund to the retail public, how it will deliver lower volatility and increased income.

22 May 2012

Mastering the small to mid cap sector

22 May 2012 – Fairview Equity Partners, Executive Director and Portfolio Manager, Leigh Cronin, provides an update on the small to mid cap sector, performance of its Emerging Companies Fund and stock selection process.

5 Apr 2012

Adding cyclical positions to portfolio

05 Apr 2012 - Northward Capital, CEO & Sector Portfolio Manager, Darren Thompson talks about the improvement in sentiment, key positions in their Australian Equities Composite fund and outlook for local equities.

20 Mar 2012

Improved economic conditions emerging

19 Mar 2012 – Lodestar Capital Partners, Portfolio Manager, John Morgan provides an update on the improving global economic situation and what this has meant for the local market and their Australian Strategic Share Fund.

1 Feb 2012

Fairview: shale plays and private equity

31 Jan 2012 – Fairview Equity Partners executive director and portfolio manager, Michael Glenane, reveals which sectors he has his eye on; the relationship between private equity and small caps; and the key influencers of his fund’s performance last year.

20 Jan 2012

Bill Evans bets on global stimulus in 2012

20 Jan 2012 – Westpac Banking Corporation’s (ASX:WBC) Global Head of Economics, Bill Evans, provides forecasts for Australian growth, interest rates and house prices and predicts a recession in Europe, stagnant US growth and China slowdown will spark stimulus policies.

5 Dec 2011

Remaining overweight banks and resource stocks

05 Dec 2011 - John Grace, Head of Equity at fund manager Ausbil Dexia talks about the importance of yield in the total return for banks and industrials and their overweight positions.

24 Oct 2011

Small caps forecast to grow earnings in 2012

24 Oct 2011 – Fairview Equity Partners, Executive Director, Michael Glenane makes the case for stocks within the Small Ordinaries Index, explains their Emerging Companies Fund and approach to consistently beating their benchmark.

18 Oct 2011

Inflation linked bond fund delivers

18 Oct 2011 – Antares Fixed Income Portfolio Manager, Tano Pelosi discusses recent stellar returns, the long term outlook for inflation and who invests in inflation linked securities.

7 Oct 2011

A flexible approach to trading the market

Oct 07, 2011 – Lodestar Capital Partners, Portfolio Manager, John Morgan explains their approach to buying and selling stocks, adjusting exposure to the market to reflect current conditions and why the market is cheap on any metric.

21 Sep 2011

Local market set to move higher in 2012

23 Sep 2011 – Northward Capital, Chief Investment Officer, Simon Rutherfurd discusses the local market, their biggest positions and why 2012 should see the market move higher.

17 Oct 2011

Reporting season analysis

17 March 2011 - John Grace, Director of Equity at fund manager Ausbil Dexia talks about the reporting season, some of its biggest holdings and why the market will get back to 5,000 points and stay there.

17 Oct 2011

Small to Mid cap strength set to continue

06 Dec 2010 – Ausbil Dexia, Portfolio Manager, Micro Caps, Tony Waters, talks about the strength in this segment of the market, where they have made money and their top 3 holdings.

17 Oct 2011

Ausbil MicroCap Fund

23 Sep 2010 – Ausbil Dexia, Portfolio Manager, Micro Caps, Tony Waters, takes a look at the mid to small cap segment of the market and how these stocks have performed this year.

17 Oct 2011

Fund manager update

13 July 2010 – John Grace, Director of Equity at fund manager Ausbil Dexia talks about the market over the last 12 months, their performance, best picks and outlook for FY 10/ 11.

5 Nov 2009

Aussie equities: fair value?

11 November 2009 – John Grace, Director of Equity at fund manager Ausbil Dexia discusses valuations, sector rotation and the outlook for FY 10 & 11.


Growth Fund

The Growth style of investment management focuses on companies whose forecast sales and earnings growth are likely to be better than those projected for the market, with strong balance sheets and a manageable levels of debt. In implementing a Growth strategy fund managers focus on companies with a proven track record, assuming the company will continue its success. However the market also recognises the superior quality of these stocks and Growth investors often pay a premium.

Value Fund

The Value style of fund management focuses less on earnings and more on company price, buying stocks believed to be undervalued. Statistical measures and qualified judgement are employed by Value fund managers to identify bargain stocks, with the view that a company’s true value will eventually be recognised resulting in share price growth. The Value approach means company shares can be bought relatively cheaply. Risks include ability to identify a genuinely undervalued stock and timing, not buying to early or late.

Style Neutral Fund

Style Neutral or growth at a reasonable price (GARP) fund managers do not follow a particular style but aim to exploit the differences between market price and investment value within their stockholdings. Style Neutral fund managers seeks stocks with strong expected future earnings growth yet avoid stocks they believe to be “fully priced” or “overvalued”. The difficulty here relies on the stock-picking skills of individual portfolio managers rather than a clearly defined process that an entire management team is following. 

Hedge Fund

Hedge funds are a different type of managed fund. They can undertake a wider range of investment and trading activities, across a diverse range of assets such as stocks, bonds and currencies and employ a wide variety of investment strategies and techniques. They are generally not sold to the public or retail investors and are typically open to high net worth individuals and institutions, such as superannuation funds. As a result they are much less regulated. 

Global Macro Fund


Global macro fund management is again a different style of investment. Macro-style managers invest in opportunities based on macroeconomic factors, typically across regions and across the major asset classes. Interest rates and inflation levels, monetary policy, geopolitical changes and government policies are some, but not all, of the factors that can influence investment decision. The Global macro style funds are also subject to fewer restrictions. 

Asset allocation

Asset allocation is an investment strategy that enables funds to diversify their portfolio across a range of asset classes, in varying weights depending on risk appetite. This diversification helps balance risk and reward. The four major asset classes with the Australian managed funds industry are cash, fixed income (bonds), equities (shares) and property. However commodities, infrastructure, insurance products, derivatives, foreign currency and collectibles (art, coins, etc.) are also alternative investment assets.
 

Cash assets, such as short-term bank deposits, bills or treasury notes, are highly liquid. They are safer investments designed for a short-term period, yet also carry the lowest level of return and can be affected by inflation. Typically cash offers little potential for capital growth. Fixed interest, such as government and corporate bonds, is a more volatile asset than cash, however, it is less volatile than growth assets. Fixed interest carries a low to medium risk, depending on the counterparty, and predominantly rewards investors through a regular income stream, which is usually higher than cash investment earnings. Cash and fixed interest are classed as ‘defensive’ asset classes, designed to defend an investment fund from losses. They are popular with short-term or risk averse investors looking for more secure investments with some consistency in returns.
 

Property assets include both direct property (actual ownership) and listed Real Estate Investment Trust (REIT) investments across residential and commercial sectors. REIT prices move in accordance with underlying property fundamentals and broader share market volatility. Shares typically fluctuate with movements in a company’s profitability and general economic and industry conditions. As a result shares bear more risk of capital loss than cash or fixed interest. Company growth means profits can be reinvested or distributed to investors via dividends. In Australia and New Zealand, there are also tax benefits for investors through the franking credits carried by dividends. International shares also have the additional risk of exchange rate changes, though the benefits include diversification and access to emerging markets and industries not well represented in Australia. Property and shares are regarded as ‘growth’ assets. They are higher risk and more volatile assets, designed for long-term or aggressive investors willing to ride out market volatility for potentially higher returns.
 

An investor’s risk tolerance, ultimate goal and investment time frame all influence a fund’s asset allocation. There are various asset allocation strategies based on these factors. Strategic Asset Allocation produces an asset mix that offers optimal balance between expected risk and return over a long-term investment period. Tactical Asset Allocation sees investors take an active approach and attempt to position a portfolio into those assets, sectors, or individual stocks that show the greatest potential for gains. Core-Satellite Asset Allocation, a hybrid of both the strategic and tactical strategies, and Systematic Asset Allocation are further strategies.