Funds management services are set to boom in 2015-16 on the back of low interest rates, according to an IBISWorld report.
The research firm said its revenue for 2014-15 was $6.5 billion and forecast revenue for 2015-16 as $7.2 billion with growth at 10.6 per cent. The industry follows oil and gas extraction, child care services, and beef cattle farming.
IBISWorld senior industry analyst, Ryan Lin, said low interest rates are expected to encourage investors to use managed funds as they are typically able to generate greater returns from cheap debt.
“The rising value of funds under management will result in the industry generating increased revenue from fees,” Lin said.
“The expanding presence of the fund-of-funds model will further draw investors to the industry as it makes available a wider range of asset classes and greater investment diversification.”
The report said the presence of cheap debt, higher levels of wealth, and a return to strong performance in equity markets following a low in late 2014-15 are expected to contribute to a positive year for fund managers.
Among the industries set to fall is credit unions with a forecast growth of -7.8 per cent thanks to low interest rates.
“Credit unions and commercial banks have increased their activity in the residential property market, as demand for housing has boomed,” Lin said.
“But lower interest paid on their growing lending portfolios will have an adverse effect on revenue.”
