The ASX’s launch of the mFund Settlement Service, formerly known as AQUA II, has the potential to be a “bigger game-changer than FOFA for the advice industry”, according to a portfolio construction consultant.
The service, tipped to go live early this year, “enables the automation of settlement of applications and redemptions for managed funds on the ASX,” the company stated.
This service encourages a more competitive market, Santi Burridge, managing director at Implemented Portfolios, told ifa.
“Advisers and investors will be able to build diversified scalable portfolios without the embedded value-chain conflicts that currently exist,” Mr Burridge said.
“This should flow thorough to a more competitive market, greater innovation and assist advisers in building scalable risk-managed portfolios while reducing costs not only to the client but in their back office.”
Mr Burridge also said the mFund Settlement Service will benefit SMSF investors, who have traditionally used the ASX just to trade equities.
“This development will allow [SMSFs] to build more diversified risk-managed portfolios which should lead to better long-term investment outcomes.”
Bell Direct chief executive Arnie Selvarajah previously told ifa sister title SMSF Adviser that the service can help SMSF investors focus on portfolio diversification and maximising investment returns, rather than focusing on the cost of administration.
“My sense is [trustees are] not well diversified in their portfolio construction,” Mr Selvarajah said. “So they might be saving $3,000 to $4,000 in admin fees, but leaving $15,000, $20,000, $50,000... by not focusing on the performance aspect.
“If they can start to access managed funds easily, and cheaply, they could add different asset classes, different sectors, different geography [and] exposure into their portfolios and hopefully get a better result from the portfolio performance.”
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