ASX has announced that it intends to release a consultation paper to seek feedback on a proposal to wind down and close its managed fund settlement service, mFund.
mFund was originally launched in 2014 with the goal of providing investors and financial advisers with a faster and more efficient way of accessing unlisted managed funds.
However, in a statement on Wednesday, ASX acknowledged that its settlement service had only attracted $1.6 billion in funds under management (FUM) across 232 funds to date, well below the levels of popularity seen for ETFs in recent years.
“Data suggests an increasing issuer and investor preference for exchange-traded funds (ETFs) and there has been significant growth in the ETF market via ASX, which now has $136 billion of FUM across 283 funds,” the market operator said.
“ASX also notes the expansion of active ETFs in the Australian market as well as the strong growth of ETFs overseas and expects that Australian investors and product issuers will continue to prefer to transact using ETFs.”
In its announcement, ASX indicated that it is aiming to release a consultation paper regarding the future of mFund in June, with a consultation period expected to remain open for six weeks.
“ASX is giving this notice in the interest of transparency and to give our stakeholders advance notice of the consultation,” it said.
“A final decision regarding mFund has not yet been made and the mFund service will continue to operate as normal throughout the consultation process.”
According to ASX, the upcoming consultation is expected to seek feedback on a number of issues, including industry preferences for transacting in managed funds via ASX and key considerations relevant to a wind down should the decision be made to close mFund.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.