Australia needs a structure that allows people offshore to invest here in their home currency, the head of Equity Trustees corporate fiduciary and financial services said.
Harvey Kalman said offshore interest in Australia is high but overseas investors want to invest in their local currency.
He said the capability is widely available in Europe through a structure known as undertakings for collective investment in transferable securities (UCITS).
A UCITS fund listed on one European exchange can be distributed on other exchanges throughout Europe. Most exchange-traded funds in Europe are UCITS-compliant.
An Asia-Pacific fund passport arrangement, in which Australia could participate, has been discussed but the talks are nascent.
Kalman said offshore interest was especially high in an Australian bond fund with a multi-currency capability.
“If we had that kind of structure, our $1 billion PIMCO fund would be three or four times bigger,” Kalman said
Investors wanted to be in the PIMCO EQT Australian Bond Fund, but did not necessarily want the Australian dollar currency risk.
He added that a new A-UCITS-style structure would be akin to Australian real estate investment trusts.
“Singapore is about to do it; Hong Kong will do it before we do,” he said.
Earlier this year, the asset management business of Barclays’ asset-management arm, Capital Fund Solutions, launched a UCITS-compliant retail renminbi bond fund in Singapore. The fund invests entirely offshore in Hong Kong or China-issued bonds.
About 40 per cent of new UCITS sales are outside of Europe, including Asia. In Hong Kong, Singapore and Taiwan, more than 70 per cent of authorised investment fund are UCITS compliant, according to JP Morgan.
“If we don’t do this, we’ll miss out on offshore investment and the economies of scale that go with that,” Kalman said.
