The Australian funds management industry now oversees $2.6 trillion, but only 3.5 per cent of the funds invested come from foreign investors, according to a new report.
The Financial Services Council (FSC)/UBS 2016 State of the Industry Report, prepared by Kreab Research, found that at $2.627 trillion, Australia has "the fourth largest contestable pool of funds in the world".
However, only $43.6 billion – or 3.5 per cent – of the total pool of funds managed by Australian investment firms comes under the heading of "financial services exports" (ie. money that comes from overseas investors).
The FSC/Perpetual Australian Investment Managers Cross-Border Flows Report, released in November 2015, found that the Australia's export of financial services has doubled over the past five years.
The State of the Industry Report found that the export of financial services to foreign investors contributes $336 million directly to the Australian economy and is responsible for "1,426 equivalent jobs".
"If we are to fulfil our potential in funds management exports and become truly competitive on the global scene, the government must simplify Australia’s withholding tax regime, introduce competitive rates, and broaden the range of collective investment vehicles on offer," said the report.
Of the $2.6 trillion pool of money, 74.5 per cent is managed by superannuation funds (or their external managers); retail trusts account for 12.2 per cent; and life insurance corporations have 11.4 per cent of the pie.
"Greater innovation and the opening up of service export opportunities through bilateral and multilateral trade liberalisation agreements will hopefully see this growth continue," said the report.