Justify higher fees says APRA
Investment products with higher than average costs are going to need to demonstrate they can deliver commensurately better outcomes, according to the chairman of the Australian Prudential Regulation Authority (APRA), Wayne Byres.
In an address to the A50 Australian Economic Forum in Sydney, Byres pointed to development in the investment and superannuation sectors and said the continuing low return environment was impacting growth in superannuation assets "as well as placing an increasing focus on investment management and administration fees".
"This is an area where there would seem to be scope for enhanced efficiency, and for the benefits of economies of scale to come to the fore," he said. "At the very least, the drive for more transparency about costs and fees will increase the need for products with higher-than-average costs to demonstrate they are delivering commensurately better-than-average outcomes."
Looking at the superannuation industry more broadly, Byres said that, in more recent times, the demographic profile of members had begun to change with a sizeable proportion in retirement (the decumulation stage), resulting in the need for funds to review the implications that has for their investment strategy (for example, in relation to liquidity, risk appetite, and appropriate risk/return settings).
"It also requires, as the Financial System Inquiry (FSI) noted, new thinking and innovation to respond to the paucity of investment and pension/retirement income products available to the community," Byres said. "Overall, we expect the assets of the superannuation sector will continue to grow strongly, albeit perhaps less quickly than in the past as more members begin to draw down on their savings."
Recommended for you
Blackwattle Investment Partners has hired a management trio from First Sentier Investors – who departed amid the closure of four investment teams last year – to run its first equity income offering.
After passing $300 billion in funds under management, Betashares is forecasting the Australian ETF industry could reach $500 billion by the end of 2028.
Ausbil is to expand its active ETF range with two ASX-listed launches, one focusing on global small caps and one on listed infrastructure.
Up to 20 per cent of wealth and asset managers globally are set to be acquired in the next five years, according to Morgan Stanley, with focus expected to move to ‘inter-sector’ deals between industries.
