ASIC’s design and distribution obligations will be top of mind for Australia’s fund managers in the new year, with many struggling with the conundrum of how to distribute their funds to the correct target market, a new survey has found.
The report from funds transaction network Calastone surveyed Australian asset management industry employees and found that 66 per cent said reaching the right target audience for their funds was the key risk in the year ahead.
A further 47 per cent nominated regulation more broadly, including the design and distribution obligations, as their key risk in 2021.
The new obligations, which take effect from 5 October 2021, will see issuers of financial products required to produce a target market determination before they are able to distribute a fund or other financial product to retail investors.
The determination will need to set out who the product is targeted towards, how often the product issuer will review the determination, and how they will collect information from product distributors about consumers’ response to the product.
Another prominent set of new regulations on fund managers’ minds for 2021 is the government’s proposed Your Future, Your Super reforms, which have caused debate and some controversy in the industry.
Among fund managers responding to the Calastone survey, 73 per cent believed there would be consolidation of super funds in 2021 to reduce costs, while 51 per cent thought there needed to be better choices available to fund members to be able to avoid poor default funds.
Fund managers also predicted the ongoing growth of the passive side of the asset management market, with 76 per cent of survey respondents saying more low-cost product launches would drive the future of the asset management industry.