A number of fund managers have expressed an optimistic attitude towards the Australian Securities Exchange’s (ASX) new quotation system as it will provide opportunity to gain access to new target markets.
The ASX rule framework will essentially allow listed managed funds capability, which can result in investors going direct rather than through the standard investment platform. It will be announced in the second half of 2012.
A number of fund managers told InvestorDaily Aqua II will enable them to provide an alternative access point to investors, which would result in new client bases.
“We’re close to making a decision and more than likely we’ll be keen to participate sooner rather than later,” K2 Asset Management head of distribution Andrew Hall said.
“It’s another avenue for us so if it’s efficient, we’ll be interested to participate.”
He said self-directed investors are the most attractive market to target.
However, fund managers taking caution over Aqua II are concerned with issues on the registry level, whether it will work and the capital expenditure, Hall said.
“But I personally don’t think it’s an immediate threat to platforms,” he added.
Equity Trustees head of corporate fiduciary and financial services Harvey Kalman said he believes his organisation was the first to sign up as a foundation member of Aqua II and expects the “logic” of it to work.
“We also expect initial teething problems because you’ve got to write all this code for the interaction between the registries and the fund management custodian administrators,” Kalman said.
Aqua II should be considered as part of fund managers’ institutional strategy, Kalman said.
“Think about it as another platform [through] using the ASX as a clearing house rather than being listed on the ASX,” he said.
“The transaction cost should be cheaper because of the electronic, straight through processing style and we’re also seeing platforms put up their cost so to that extent, it will be another option for fund managers in relation to distribution.”
Vanguard Investments’ business structure includes both listed vehicles, through exchange-traded funds (ETFs), and unlisted vehicles.
“We’ve got some time to think this through and for organisations that don’t offer ETFs, this has a whole range of attractions and benefits to assess, I would think,” Vanguard managing director of Australia John James said, adding that the development of Aqua II is good for the industry overall.
Specialist managers who are partnered with boutique investment managers will consider Aqua II if suitable to the business channel.
“We’re making sure that Aqua II fits the business model and advice relationships of advisers who use us or the brokers who may want to work with us,” Australian Unity Investments head of product Mark Horton Andrews said.
“We’re still in analysis phase and we’ve made no decision to go with Aqua II but what we are doing is talking to groups that we haven’t done a lot of work with at the moment.
“It’s not that we’re being cautious, it is just a different business channel and everyone’s doing their standard due diligence before jumping onboard.”
In addition, the jury’s still out on the listed products movement, Andrews said.
“I wonder if when investors and advisers will want to take market risk again that we may see a trend back towards managed investments,” he said.
Colonial First State product and channel development manager Peter Chun said the Commonwealth Bank of Australia group is currently assessing the Aqua II opportunity but no decision has been made on whether to participate.
“There has been good discussion with the ASX over the past 12 months,” he said.
AMP Capital and Tyndall Investment Management declined to comment.
