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1301.0 - Year Book Australia, 2009–10  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 04/06/2010   
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Contents >> Financial system >> Managed funds

MANAGED FUNDS

The term 'managed funds' is used loosely in the financial community to embrace two broad types of institutions. The first are managed funds institutions (such as life insurance companies, superannuation funds and unit trusts) which buy assets on their own account. The second are investment or fund managers which act as investment agents for the managed funds institutions, as well as others with substantial funds to invest. Investment managers have relatively small balance sheets because most of the assets they manage are purchased on behalf of clients. The managed funds total assets (graph 27.22) represents assets of managed funds institutions only. The growth in the assets of superannuation funds between 2006 and 2007 coincides with changes to superannuation legislation in June 2007 designed to attract investor funds. The decrease in the assets of managed funds from 2007 to 2009 largely reflects fluctuations in the stock market, particularly as a result of the global financial crisis which began in late 2007.

27.22 MANAGED FUNDS TOTAL ASSETS, By type of institution - 30 June
Graph: 27.22 MANAGED FUNDS TOTAL ASSETS, By type of institution—30 June


The managed funds industry is difficult to measure because of the large amounts of financial interaction between managed funds institutions and fund managers, and between fund managers themselves. Consequently, double counting of funds which are 'churning' through the system needs to be addressed in order to derive a true measure of the funds management industry. One approach is to take the consolidated assets of collective investment institutions, add to it those funds managed on behalf of other clients such as governments, corporations, charities, overseas clients and 'net-off' funds sourced from other domestic fund managers. Table 27.23 provides this measure of the total funds management industry.

27.23 MANAGED FUNDS INDUSTRY, Total funds under management - 30 June

2007
2008
2009
$m
$m
$m

Total consolidated assets of managed funds institutions
1 359 967
1 307 135
1 206 402
plus
Total funds under management of investment managers sourced from Australian entities other than managed funds institutions
370 727
349 444
280 207
plus
Total funds under management of investment managers sourced from overseas
62 537
50 985
42 415
less
Total funds under management of investment managers sourced from other investment managers
71 532
32 964
12 774
Total
1 721 699
1 674 600
1 516 250

Source: ABS Managed Funds, Australia (5655.0).



Managed funds institutions

Managed funds institutions pool the funds of many small to medium investors and use them to buy a particular type, or mix, of assets. The asset profile can be structured to satisfy individual investor requirements regarding, for example, the degree of risk, the mix of capital growth and income, and the degree of asset diversification. Managed funds institutions in ABS statistics comprise the following:

  • life insurance offices
  • superannuation funds
  • public unit trusts
  • friendly societies
  • common funds
  • cash management trusts.

Funds of a speculative nature that do not offer sufficiently liquid redemption facilities - for example, agricultural and film trusts - are excluded.

To derive the total assets of each type of managed funds institution in Australia on a consolidated basis, it is necessary to eliminate the cross investment between the various types of institution. For example, investments by superannuation funds in public unit trusts are excluded from the assets of superannuation funds in a consolidated presentation. Table 27.24 shows consolidated assets by type of institution.

27.24 ASSETS OF MANAGED FUNDS - 30 June 2009

Unconsolidated assets
Cross invested assets
Consolidated assets
Type of institution
$m
$m
$m

Life insurance offices(a)
205 780
43 068
162 712
Superannuation funds
891 450
151 638
739 812
Public unit trusts
276 381
27 160
249 221
Friendly societies
6 511
2 443
4 068
Common funds
7 691
921
6 770
Cash management trusts
43 819
-
43 819
Total
1 431 632
225 230
1 206 402

- nil or rounded to zero (including null cells)
(a) Investments by pension funds which are held and administered by life insurance offices are included under life insurance offices.
Source:ABS Managed Funds, Australia (5655.0)



Investment managers

Investment managers are employed on a 'fee-for-service' basis to manage and invest in approved assets, on their clients' behalf. They provide a sophisticated level of service, matching assets and liabilities. They act in the main as the managers of pooled funds, but also manage clients' investments on an individual portfolio basis. Investment managers offer their services to a range of clients, including superannuation funds, life insurance offices, corporations, government entities and high net worth individuals.

A considerable proportion of the assets of managed funds institutions are managed via investment managers. At 30 June 2009, $691.0b (57% of the consolidated assets of managed funds institutions) were channelled through investment managers. Investment managers also accept money from investors other than managed funds institutions. At 30 June 2009, investment managers invested $309.8b on behalf of government bodies, general insurers and other clients, including overseas clients.

Table 27.25 shows the total unconsolidated assets of each type of managed fund institution, and the amount of these assets invested through investment managers.

27.25 ASSETS OF MANAGED FUNDS, Invested through investment managers - 30 June 2009

Total unconsolidated assets of managed funds
Assets invested with investment managers
Type of fund
$m
$m

Life insurance offices(a)
205 780
128 145
Superannuation funds
891 450
418 783
Public unit trusts
276 381
105 144
Friendly societies
6 511
1 249
Common funds
7 691
3 962
Cash management trusts
43 819
33 704
Total
1 431 632
690 987

(a) Includes both superannuation and ordinary business.
Source: ABS Managed Funds, Australia (5655.0).





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