Enemy withinBY ALEX DUNNIN | WEDNESDAY, 5 JUN 2013 11:48AM AustralianSuper caused a mild stir early this year with its proclamation that it wants to ramp up the proportion of its assets it self manages to about one-third. But the perplexing ... Upgrade your subscription to access this article
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SHARON DAVIS
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IMHO limiting the selection universe available to the end user in any way shape or form generates a potential for conflict of interest and should be prohibited. Time and time again I have seen fund groupings selling off a limited 'menu' of self-managed funds fall to 'commercial pressures' which cause them to peddle their own wares over best of breed. I have even seen a Managed Account platform exclude its own best performing Bond fund from its own menu in order to be able to charge a higher fee. The second Superfunds start worrying about how much revenue they produce rather than the returns they deliver there is a problem. I am all in favour of cost containment and in-sourcing where appropriate but only if a client centric focus is maintained. Reminder to all Superfund staff - the money you manage does not belong to you - you are not the client.
Alex I work with a large retail platform. Self management in our case is about capturing additional revenue. That's not to say that the group products aren't quality investments, it's just that it is recognised that if you can clip the ticket in various parts of the value chain then you should. look at the direction of administrative fees on platforms. The margins there are getting squeezed. If you don't have diversification of revenue then you will be in trouble. Maybe the motivation for industry funds to self manage is different. However my educated guess is it is not. The difference between a retail platform (not employer super products) is that they typically offer 50 - 300 managed funds (and shares) as choice. Industry funds don't typically offer that same level of choice. Have a look at the pricing structure of Asgard Infinity and AMP North though - they are offering a discounted admin fee if investors invest into group product. They can afford a hair cut on the admin fee as the margin in the investment fee is still there. Interesting times.