Retail unit trusts leaking FUM

Retail unit trusts now hold only 47% of the managed funds segment in Australia, down from 75% at the time of GFC, according to new Rainmaker research.

The $755 billion managed funds segment in Australia includes retail unit trusts, exchange traded funds, model portfolios on managed accounts and listed investment companies - in other words, pooled investments that are managed by investment professionals.

While retail unit trusts have leaked about $205 billion since 2009, emerging parts of the managed funds sector have experienced massive growth, hitting $400 billion in December from just $263 billion in 2010.

"This affirms how the sector is being fundamentally transformed," Rainmaker said.

ETFs and managed accounts are now 12% of the total managed funds. They are growing rapidly, at a pace that is three times faster than any other part of the managed funds pool.

BlackRock believes investors are pulling their money out of retail unit trusts as the asset management industry shows a "fee for no service"-like situation.

"Investors are redeeming from funds that charge active fees and deliver index like returns. This fat belly of the asset management industry is in structural outflow and the beneficiaries are high conviction, outcome based strategies and low cost ETFs," BlackRock head of wealth Alex Zaika said.

The $10.4 billion ETP manager added that while ETF assets currently represent less than 5% of global assets, it expects this to grow significantly.

"It is not a coincidence that BlackRock's strategy in Australia is to provide high conviction active strategies and continue to build on our market leading iShares ETF platform," Zaika said.

The Rainmaker study found that ASX's mFunds failed to attract major FUM.

Read more: BlackRockRainmaker researchAlex Zaika
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