Fund managers should consider examining different investment strategies, such as separately managed accounts (SMA), if they are to capitalise on the shift to a lower-cost environment and provide greater options to end investors.
“If we get into a lower-cost environment for investors, I think there is any number of other structures that could well be imported that would give different opportunities, whether that’s the continued growth of SMAs or … investment trusts or unit investment trusts,” BNY Mellon Asset Management Asia Pacific chief executive Alan Harden said.
“There is any number of different structures that you can put investments in to give the end buyer different options on how they allocate their wealth.”
Harden said another challenge for fund managers, particularly those looking to enter the Australian market, was the “intermediated” nature of the sector.
By intermediated he is referring to advisers, platforms and manufacturers all requiring ratings of some type.
“There are a number of people involved in this process, which adds a lot to the cost for the end investor. So trying to figure out how you can add value and retain margins is a tricky business,” Harden said.
“I think the intermediation is under review in terms of getting the cost to the customer down and I think that’s a very positive thing for long-term growth of the industry.”
He said the government reforms the Australian industry faced could potentially add to the company’s opportunities.
“I think it adds to the opportunities that we may see because it will add some hurdles to entry, which is always actually good as then the cream will come to the top,” he said.
BNY Mellon Asset Management was examining a number of options to expand into Australia’s retail market as well as further expand into Asia, he said.
“Seeing a clear path towards that is actually quite difficult in Australia. You’re very well served with a number of excellent fund managers both domestically and internationally and trying to plot a course where our strategies will add value in that array of investment managers and products and strategies is actually a little hard to see,” he said.
