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Through the looking glass

Glenn Freeman  |  30 Nov 2017Text size  Decrease  Increase  |  
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Some 142 Australian fund managers, with more than $563 billion in assets under management, have been targeted in a push for greater transparency of underlying portfolio holdings.

The campaign, spearheaded by Morningstar Australasia, is encouraging a self-regulatory approach from asset managers, who are encouraged to take voluntary steps toward full portfolio holdings disclosure.

It's already yielded positive results.

With three options to choose from, 51 per cent of managers opted for full disclosure across all products, 11 percent elected to disclose full holdings on a fund-by-fund basis, and 38 per cent maintained their Top 10 disclosure policy.

In response, more than $337 billion worth of assets under management (or 60 per cent) is now showing in full for Australian-managed funds.

"The industry is essentially self-regulating," says Anthony Serhan, CFA, Morningstar's managing director of research strategy, Asia-Pacific.

"With full portfolio holdings disclosure regulation for superannuation funds still to be implemented, and no disclosure requirements for investment funds on the horizon, there was an opportunity to step in and facilitate a movement that brings greater transparency to the industry."

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Asset managers have responded "in a constructive manner, which signals a fundamentally positive move for the investor," Serhan says.

It's cliched but true: consumers want to interact with brands they trust.

Serhan believes increasing technology uptake is also adding further expectations around information and transparency.

"Exchange-traded funds, managed accounts, and other managed investments already provide holdings transparency. This is a natural step for managed funds in Australia and will help expand the discussion with fund investors from performance to what they own."

Not clear enough

While full disclosure may be new territory for Australia, it is commonplace globally.

"As an otherwise sophisticated market, it is remarkable that Australia remains the only market with no implemented portfolio disclosure regime among the 25 analysed in Morningstar's recently updated Global Fund Investor Experience Study," Serhan says.

This partially explains Australia's Below Average rating for disclosure within the study.

"We worked with a small focus group of fund managers in the early days of the campaign including Aberdeen, Cbus, Franklin Templeton, JP Morgan, MFS, Nikko AM, Pengana, PIMCO, RARE, Fidelity and Vanguard," Serhan says.

"With many more joining the movement every day, our goal is to work with the industry towards 100 per cent coverage and disclosure."

Full portfolio holdings data is available through a large number of Australian financial advisers and major retail investment platforms.

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Glenn Freeman is a senior editor at Morningstar.

© 2017 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

is senior editor for Morningstar Australia

© 2022 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'regulated financial advice' under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information, refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

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