Managed fund providers targeted by ASIC surveillance

The corporate regulator has asked fund managers “to do more” to ensure the investment performance representations in their managed funds’ marketing materials are “appropriate”.

ASIC revealed in a statement on Thursday that having surveyed a number of managed funds’ marketing materials, it identified a number of concerns, including inadequate warnings or disclaimers about past or future performance, comparing the product to lower-risk products, indices or benchmarks and the downplaying of other risks when promoting fund benefits.

The corporate regulator confirmed that thirteen responsible entities or trustees of investment funds have since voluntarily amended, or arranged to amend, their marketing materials and/or practices across 18 funds.

The entities in question include BetaShares with ASIC highlighting particular concerns with the firm’s advertising of past returns, noting that it “was ambiguous by not clearly differentiating the returns of the fund and the returns of the index that the fund intends to track”.

Similarly, ASIC noted that Perpetual Trust Services, a member of the Perpetual group and as the responsible entity for FirstMac High Livez, may have “presented past returns without warning or with warnings that were not sufficiently prominent”, and “compared fund returns to the RBA cash rate target which appeared inconsistent with the fund’s assets and strategy”.

Also among the targeted entities are AMAL, Australian Secure Capital Fund, Balmain, Boutique Capital, CFMG Equity and Income Funds, Collins St Asset, CTSP Funds Management, Truepillars, VentureCrowd, VT NO. 2, and Wentworth Williamson.

The funds managed by the entities in question include nine registered and nine unregistered funds, with approximately $1.4 billion in assets under management.    

“Our primary concern here is retail investors and potentially unsophisticated wholesale investors, especially retirees, making important investment decisions based on marketing that does not accurately represent fund performance,” said ASIC deputy chair Karen Chester.

“Investors are entitled to accurate information about the products they may decide to invest in. Responsible entities, trustees and investment managers must ensure that they don’t stray into ‘fair weather’ marketing,” Ms Chester added.

ASIC did, however, underline that neither the corporate regulator nor a court have made any findings that the marketing by the 13 entities, or other persons or entities associated with the products, are in breach of the law, and that the entities have not made any admissions of guilt or liability. 

“In conveying our concerns to these responsible entities and trustees, we have secured timely and voluntary amendments to the funds’ marketing materials,” Ms Chester said.

ASIC's surveillance into marketing of fund performance was launched in October 2021. As a result of the current surveillance, ASIC placed interim stop orders on advertisements of PPM Units, a class of interests in RES Investment Fund and the product disclosure statement for the Private Property Trust No. 20 from Fawkner Property.

“Where we find poor conduct, we will take prompt action to protect consumers and hold responsible entities, trustees and investment managers to account. We will deploy a range of regulatory interventions, from our recent use of stop orders through to court action where warranted,” Ms Chester concluded.