Managed funds targeted by ASIC surveillance

The corporate regulator’s ongoing surveillance of managed funds has raised additional concerns that some responsible entities aren’t doing enough to ensure their funds are appropriately marketed to investors.

In a statement on Wednesday, ASIC said it has identified concerns with the marketing of five funds and the oversight of this marketing by four responsible entities during its ongoing surveillance into the marketing of fund performance and risk. Together, the funds in question have approximately $705 million in assets under management as of October 2022.

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The responsible entities and their funds are:

The marketing concerns ASIC identified varied across the funds. But overall, ASIC was concerned that the representations made were not consistent with long-standing regulatory guidance that projected fund performance must be reasonable and include prominent and proximate qualifications or warnings.

ASIC also flagged that promotion of fund benefits requires prominent and proximate balancing risk disclosure; that comparisons of funds with other products must be appropriate and reasonable; and that recommendations should be attributed and testimonials should be appropriate and reasonable. It noted that it wasn’t convinced the funds in question adhered to these rules.

The regulator, however, stressed that as of the date of its media release, neither it nor a court has made any findings that any of these responsible entities or any persons or entities associated with these funds are in breach of the law.

ASIC also underlined that the entities have not made any admissions of guilt or liability and that all the responsible entities voluntarily amended their marketing materials and practices. Moreover, “they also agreed to amend their compliance plans to enhance their approval and ongoing supervision of fund marketing”.

Commenting on the findings of ASIC’s surveillance, the regulator’s deputy chair, Karen Chester, said: “We expect responsible entities to meaningfully supervise their funds management business.”

“As managed fund gatekeepers, they need to monitor, supervise and ultimately approve the fund’s marketing to investors to ensure that it is accurate and reliable.”