Volatile investment markets resulted in a disappointing outcome for Australia's managed funds sector in 2011, with both retail and wholesale funds reporting lower than expected returns, an industry report has found.
According to the latest report from researcher Plan for Life, retail managed funds ended 2011 up a modest 0.8 per cent in the December quarter.
Overall, the 2011 calendar year was disappointing, with total funds under management falling 5.1 per cent to $486.9 billion.
"Nervous, choppy and more often than not negative investment markets saw virtually all companies report decreases in business," the report said.
"Above average performances (that is, lowest percentage falls) were recorded by BT (-2.0 per cent), Mercer (-2.1 per cent) and AMP (-3.9 per cent).
"While Perpetual (-11.8 per cent), Macquarie (-7.9 per cent), OnePath (-7.7 per cent), IOOF (-7.4 per cent) and National Australia/MLC (-7.2 per cent) reported steeper declines."
The report found gross inflows for 2011 totalled $165.5 billion, down slightly year on year by 2.1 per cent.
The December quarter inflows were only 75 per cent of those reported in the relatively strong September quarter, but they were up 1.5 per cent compared with the December 2010 figure, it said.
Retail funds excluding cash management trusts decreased by 4.9 per cent during 2011.
Despite inflows being down 23.7 per cent in the latest quarter, year-on-year inflows were still up 11.6 per cent.
"Challenger (85.6 per cent), BT (26.1 per cent), AMP (15.3 per cent), Commonwealth/Colonial (15.2 per cent) and IOOF (12.8 per cent) all reported double-digit growth in their annual retail fund inflows," the report said.
In regards to superannuation and rollovers, the report said there was a 1.6 per cent increase in superannuation funds during the December quarter, but over the year they were still down 2.7 per cent.
Overall, gross inflows into superannuation were up 15.6 per cent year on year, a 27.1 per cent fall in the latest quarter notwithstanding.
"BT Financial (48.4 per cent), netwealth (26.2 per cent), AMP (15.1 per cent) and Commonwealth/Colonial (13.8 per cent) all reported significant annual inflow increases, however, Mercer (-12.6 per cent) and Macquarie (-10.4 per cent) both saw theirs fall," the report said.
In terms of retirement income, funds under management managed to end 2011 up slightly by 1.7 per cent, and there was a similar 1.9 per cent increase in the December quarter.
During the December quarter, inflows dropped 21.4 per cent, however, overall the sector's inflows during 2011 still ended up 19.3 per cent higher than those reported in 2010.
Cash management trust and fund business showed signs of improvement from 2009 and 2010 levels despite falling a further 10.0 per cent.
Investment bonds continued to be a relatively dormant market, down 0.6 per cent for the quarter and 4.4 per cent over the whole of 2011.
Australia's wholesale funds sector experienced a slight decline of 1.0 per cent during the December quarter to $247.1 billion.
However, the report found that over the 2011 calendar year wholesale funds dropped by 9.3 per cent.
"Uncertain and volatile investment markets were at the heart of this poor performance," the report said.
"Schroders Australia (13.2 per cent) was the only wholesale manager to report any significant growth in its funds under management, while by contrast Platinum Asset Management (-21.6 per cent), Perpetual (-20.8 per cent), BlackRock (-18.1 per cent) and AMP (-17.4 per cent) experienced falls in theirs."
Overall gross wholesale inflows during 2011 were $85.3 billion, up by 4.3 per cent on the corresponding 2010 figure.
"Inflows increased 11.1 per cent in the latest December quarter. Challenger, IOOF, Vanguard Investments, Macquarie and Commonwealth/Colonial all reported significant increases in their inflows year on year," the report said.
