ASIC undertook targeted surveillance of 37 managed funds operated by 20 responsible entities that hold a collective $21 billion in assets, finding that many had “confusing or inappropriate” product labels and that redemption features did not match the liquidity of the underlying assets.
“Funds should be ‘true to label’. This is not a nice-to-have. It’s a must-have for responsible entities in meeting their legal obligations to their investors, especially in times of market volatility,” said ASIC deputy chair Karen Chester.
“Inappropriate labelling of a fund can mislead investors into believing that the fund is much safer or more liquid than it actually is. Put simply, a fund should not use terms such as ‘cash’ or ‘cash enhanced’ unless its assets are predominantly in cash and cash equivalents.”
As a result of the ASIC action, seven responsible entities have voluntarily changed or proposed to change the names of their funds to reflect product composition, one RE is proposing to change the asset allocation of the fund to reflect its name, three have undertaken or committed to undertake a review of their funds, and one withdrew misleading promotional materials and wound up its fund.
“Managed investment products are not prudentially regulated or government-guaranteed, so it is paramount that consumers are not misled about the level of risk associated with a particular product,” Ms Chester said.
“Responsible entities must ensure their products are ‘true to label’ and the redemption terms offered to investors are supported by and consistent with the underlying liquidity of the fund’s assets.”
ASIC began its surveillance in recognition of the fact that consumers may look for alternative investment options offering regular or higher returns during times of market volatility. The regulator shortlisted products from more than 350 funds with over $65 billion in assets and sought further information on asset allocation, liquidity, maturity profile and resilience from 20 responsible entities, identifying concerns with the labelling practices of 16 funds from 13 responsible entities.
Platinum should change their name…it’s not a commodities fund…. 🙂
Hostplus so called Balanced Fund.
APRA heatmap says 93% Growth Assets.
Talk about True to Label hey ASIC ???
But that’s fine it’s an Industry Fund.
Regulatory Capture – massive ASIC corruption
“Managed investment products are not prudentially regulated or government-guaranteed, so it is paramount that consumers are not misled about the level of risk associated with a particular product,”
How is Hostplus Balanced option going Karen?
A list of the funds would be good. Does that also mean “Balanced” funds with more than 80% growth assets will be called out?
Let me guess all the naming of industry fund investments like “Balanced” in 80%+ growth assets and “medium risk” investments in property developments was fine.
The comments from Ms Chester make me think they’re just talking about Pendal and Janus (etc.) funds that are short-term fixed interest but use the word cash.
Can they be a little more obscure with their absolutely targeted use of their powers and rules so I can at least feel like they don’t have an agenda?