The Aust Unity alternative
Australian Unity is one of the Rising Stars in the retail platform sector, having increased funds under management to its own platform by 65 per cent during the 12 months to December 2004.
The group began business in the friendly society sector, and in the last 10 years has made a concerted effort to grow its funds management and investment capabilities, specialising in property, mortgage trusts and boutique offerings, such as its joint venture arrangement with microcap specialist Acorn Capital.
While the Australian Unity platform, Freedom of Choice, is small, it effectively aims to provide a second tier platform service.
David Bryant, head of investments, explains: “We see it as a simpler, easier option for the market. There’s a lot of platforms out there, with a lot of technology that sits around them, and in terms of their capabilities they are very good.
“But what we want to provide is a platform for smaller employers and the like, that is simpler in content, but meets the needs of that market. We think that’s an important part of the market, and is an easier, more effectively-priced option.”
Currently, the Freedom of Choice platform represents only $120 million of the $2.5 billion in funds managed by Australian Unity, with many of its managed funds listed on other platforms, including BT, Macquarie and IOOF.
A small dealership in Sydney has white labelled Freedom of Choice, but Bryant says that “it hasn’t really been designed for that purpose”. He adds: “It’s a discussion we would be willing to have, but it’s not really foremost in our minds.”
Australian Unity’s future plans include the creation of a broader product set, and it recently launched a high yield version of its mortgage trust.
In addition, it has entered into a joint venture with Vianova Asset Management, comprising an absolute return fixed interest investment option.
According to Bryant, the retail platform sector has now reached a level of maturity.
“I think people are very open these days to carrying each other’s products, even though they may be products from other platform competitors.
“You have to give credit to the industry in that it seems to be working on a really sensible, co-operative basis, and I think everyone benefits from that.”
While Bryant questions the theory that there are too many platform providers in the market, and consolidation is inevitable, he does concede that “it seems to be a pretty full marketplace, so it would be a brave competitor to start up today”.
And he believes existing players are likely to remain put: “Because of the technology spend and development that’s gone on, once that spend is made, there’s no compelling reason for people to exit the market. Because you have spent your money up-front, your operating costs on a continuing basis are better.”
— Larissa Tuohy
AUTHOR
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