Master trusts and wraps: Playing in the major league

Australia’s platform industry has emerged from the global financial crisis alive and well.

The latest data covering platforms and wraps reveals that the sector’s survival through adverse markets was not just owed to the inherent scale of the major players, but to product innovation and timeliness.

The scale derived from Westpac’s acquisition of St George saw BT Financial Group emerge as the fastest-growing platform in Australia for the 12 months to June, but having the right product at the right time saw AXA Australia Group finish a strong second.

However, when it comes to absolute market share it is a story built on scale, and the majors dominate. The combined weight of the National Australia Bank and MLC Group ensured that it has the greatest market share with respect to platforms and wraps, commanding 13.9 per cent of the space, followed by AMP with 12.4 per cent, the Commonwealth/Colonial Group with 11.4 per cent and then BT Financial Group with 11.1 per cent.

However, it has been AXA Australia’s North range of products which saw the company arguably punching above its weight with respect to both growth and market share. The company was not only the second-fastest growing in terms of Funds Under Management (FUM), but is the sixth-largest player in the space by FUM.

According to data provided by Plan for Life, AXA’s North products finished first, second and third with respect to fastest-growing products, something which clearly translated into the company’s overall growth for the year.

BT Financial Group’s Super for Life retirement products also showed solid growth, while MLC Masterkey emerged as a steady performer.

The importance of the North product set to AXA’s fortunes are also placed in context by an examination of the Plan for Life data dealing with product size, with the majors boasting real dominance.

The data reveals that AMP’s Flexible Lifetime Super product is the largest in the market, boasting 5 per cent market share, followed by MLC’s Masterkey Gold Star Super with 3 per cent, Macquarie Wrap with 2.9 per cent, Mercer Super Trust with 2.7 per cent, then Colonial First State’s FirstChoice Personal Super product with 2.5 per cent.

When all products within the Plan for Life Top 20 are taken into account, then real market dominance is clearly held by AMP, followed by MLC, then Colonial First State.

Commenting on the data, industry analyst and managing director of research house, Dexx&r Mark Kachor said it was clear that AMP and the major banks had an unassailable position in the market because of their size and scale.

He said the impact of the AXA North products had been impressive, but it was likely its growth would taper as markets recovered and investors felt less inclined towards paying a premium for capital protection.

“The impact of the North products appears similar to the capital-protected products that emerged in the early 1990s,” Kachor said. “Over time, and as markets recover, investors find them less attractive.”