Growth in mFund providing new options for investors

Photo of Oran D’Arcy, ASX By Oran D’Arcy, ASX

min read

 Simple and easy access to wide array of asset classes via unlisted managed funds.

ASX’s mFund service experienced growth of 66.3 per cent year on year, driven in most part by self-managed super funds looking to achieve portfolio diversification and avoid platform fees. There is currently $757 million in funds under management via mFund and that is expected to reach $1 billion over the coming 12 months.

mFund provides a modern way for investors to buy, hold and sell units in unlisted managed funds through their broker, in a process similar to buying and selling shares. Investors can see their mFund units on their Holder Identification Number (HIN) alongside their other investments such as shares and Exchange Traded Funds (ETFs).

Launched in 2014, mFund initially listed just under 50 funds. Today there are 203 funds from 68 fund managers available through 19 brokers.

Transactions on mFund are streamlined to facilitate electronic order flow through online broking accounts, effectively automating the application (buying) and redemption (selling) of units.

One application form

Customers want to access unlisted managed funds without the need to complete individual application forms for each of the funds in which they want to buy units. Using their broker account, customers can buy units in several different funds with the broker’s application form requirement being fulfilled once. When the broker account set-up is completed, no further application forms are required to buy and sell.

As the world moves towards more digitally focused financial transactions, an increasing number of customers want this approach and ASX believes mFund breaks down barriers of entry to unlisted managed funds.

mFund also operates within the ASX rule framework, which adds peace of mind for investors – something that ranks high on investor requirements in the current climate.

What investors are buying on mFund

Investors are using the service to access the wide array of asset classes available, such as Australian and global equities, fixed income, property, infrastructure and mixed-asset funds.

This trend is topical as savvy investors move away from single-stock-weighted portfolios and add more varied and contemporary instruments for balance, achieve diversification and enhance opportunities for returns.

The service facilitates fund selection by providing consistent and relevant information pertaining to each fund. For example, when you navigate to the fund list you will find the management fees, minimum investment amount and PDS for each of the 203 funds.

Feedback from the customer base of financial advisers and direct investors is that the ease of access to information makes the difficult task of diversifying a portfolio much easier.

The chart below outlines the spread of asset classes as a percentage of funds under management.

For more information about how to use mFund, see the ASX article mFunds put global equities in easy reach for local investors.

What the next 12 months holds for mFund

ASX completed the latest Investor Day and Adviser Workshop roadshows in late 2018, which included events in Brisbane, Melbourne and Sydney and regional events across New South Wales and Victoria. Attendances are increasing each year; up 30 per cent from 2017. Close to 1,500 investors and financial advisers attended in 2018, which provided a good opportunity for education around mFund.

Post-event feedback from advisers and investors indicates the growing interest in mFund and other exchange-traded products (ETPs). ASX is looking to build on this informational approach and continue the education process around how, when and why investors can use mFund as they diversify their portfolios.

In 2019 ASX will again be running the investor and adviser day series and with 2018 feedback in mind, will look to add more mFund content. Dates will be confirmed shortly.

The choice for investors is ever increasing and ASX believes the managed fund suite accessible through mFund covers most asset classes and risk appetites required for an investment portfolio.

ASX now offers exposure to the strategies of 17 of the top 20 managed funds held by Self-Managed Superannuation Funds (SMSF) (with 13 of these accessible through mFund). The service offers funds from Australian and global fund managers as well as exclusively ethically approved investment vehicles.

Table 1: Top 20 managed funds by SMSF ownership

Source: September 2018 SMSF Benchmark Report. Class of units/fund may differ.

With service improvement always a consideration, ASX spent time with its partners last year looking for opportunities to enhance the offering and we have streamlined the process for introducing new funds to the service. From proposal, issuers can have a fund listed on mFund in six to eight weeks. The benefit of this improvement is reflected in the growing number of funds available through the service.

ASX expects the number of investment managers available through mFund to continue to increase over the next 12 months as the service becomes more popular and there is greater adoption by retail investors and financial advisers. Likewise, with the ongoing increase in the value proposition, ASX is anticipating continued investor uptake and growth in mFund.

If you would like to learn more about mFund or any of ASX’s investment products, look at the mFund Webpage or contact Oran D’Arcy and the team at mFund@asx.com.au.

About the author

Oran D’Arcy is National Business Development Manager, ASX Investment Products.

The views, opinions or recommendations of the author in this article are solely those of the author and do not in any way reflect the views, opinions, recommendations, of ASX Limited ABN 98 008 624 691 and its related bodies corporate ("ASX"). ASX makes no representation or warranty with respect to the accuracy, completeness or currency of the content. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian financial services licensee before making investment decisions. To the extent permitted by law, ASX excludes all liability for any loss or damage arising in any way including by way of negligence.

© Copyright 2018 ASX Limited ABN 98 008 624 691. All rights reserved 2018.
Previous Next
Share: