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1301.0 - Year Book Australia, 2004  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 27/02/2004   
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Contents >> Financial system >> Managed funds

The term 'managed funds' is used loosely in the financial community to embrace two broad types of institutions. The first are collective investment institutions (such as life insurance companies) which buy assets on their own account. The second are investment or fund managers which act as investment agents for the collective investment institutions as well as others with substantial funds to invest. Investment managers have relatively small balance sheets because most of the assets they acquire are purchased on behalf of clients. The significant growth in managed funds to 2000 (graph 26.21) eased during 2001 and has been flat since. The main influence on this growth pattern has been share market prices.

Graph - 26.21 Managed funds, Consolidated assets - 30 June


Collective investment institutions

As the name implies, collective investment institutions pool the funds of many small 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. Collective investment institutions comprise the following:
  • life insurance corporations
  • pension and approved deposit funds
  • public unit trusts
  • friendly societies
  • common funds
  • cash management trusts.

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

To derive the total assets of collective investment institutions 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.

Although statistics for each of these institutions were presented earlier in this chapter, the accompanying tables summarise their consolidated position (i.e. after the cross investment between the institutions has been eliminated). Table 26.22 shows their assets by type of institution and table 26.23 shows assets by type of investment.

26.22 ASSETS OF MANAGED FUNDS - 30 June 2003

Total
Cross invested
Consolidated
Type of institution
$m
$m
$m

Life insurance corporations(a)
194,859
35,947
158,913
Pension funds
379,274
67,543
311,731
Public unit trusts
156,322
25,727
130,595
Friendly societies
6,116
1,544
4,572
Common funds
8,930
324
8,606
Cash management trusts
29,306
-
29,306
Total
774,808
131,085
643,723

(a) Investments by pension funds which are held and administered by life insurance offices are included under life insurance offices.
Source: Managed Funds, Australia, June 2003 (5655.0).

26.23 MANAGED FUNDS, Consolidated assets

Amounts outstanding at 30 June

2001
2002
2003
Type of investment
$m
$m
$m

Deposits, loans and placements
76,779
73,180
77,123
Short-term debt securities
62,882
63,120
67,670
Long-term debt securities
65,461
62,999
62,777
Equities and units in trusts
229,898
223,897
217,632
Land and buildings
69,904
73,607
77,805
Overseas assets
118,062
123,086
116,223
Other assets
22,208
24,380
24,493
Total
645,193
644,269
643,723

Source: Managed Funds, Australia (5655.0).

Investment managers

Specialist investment managers are employed on a fee-for-service basis to manage and invest in approved assets on their clients' behalf. They usually act for the smaller collective investment institutions such as public unit trusts. They are not accessible to the small investor. Investment managers 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.

A considerable proportion of the assets of collective investment institutions, particularly the statutory funds of life insurance corporations and assets of pension funds, is channelled through investment managers. At 30 June 2003, $450.3b (58% of the unconsolidated assets of collective investment institutions) were channelled through investment managers. Table 26.24 shows the total unconsolidated assets of each type of collective investment institution and the amount of these assets invested through investment managers.

Investment managers also accept money from investors other than collective investment institutions. At 30 June 2003, investment managers invested $183.0b on behalf of government bodies, general insurers and other clients, including overseas clients.

26.24 ASSETS OF MANAGED FUNDS, Invested through investment managers - 30 June 2003

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

Life insurance corporations(a)
194,859
134,951
Pension and approved deposit funds
379,274
187,199
Public unit trusts
156,322
89,266
Friendly societies
6,116
2,557
Common funds
8,930
8,216
Cash management trusts
29,306
28,141
Total
774,808
450,330

(a) Includes both superannuation and ordinary business.
Source: Managed Funds, Australia, June 2003 (5655.0).


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