The $57 billion multi-boutique asset manager will launch a series of actively managed exchange-traded funds, starting with an actively managed fixed income ETF that it says will be the first of its kind in the Australian market.
The ActiveX series is expected to launch its first product in the September quarter. The actively managed fixed income ETF will be followed gradually by products in other asset classes.
Challenger's chief executive of funds management Ian Saines said fixed income was a "natural entrance product" for ActiveX because other managers are focused on equities. Challenger owns multi-affiliate asset manager Fidante Partners.
"Some of our fixed income managers run some of the most popular fixed income products in the market, when it comes to managed funds. The adviser community is very familiar with them, retail investors are very familiar with them and they sell in very large quantities. So we think they are very natural products for us to lead with," Saines said.
Fidante Partners has 16 boutique managers, including fixed income, equity and global managers. The umbrella-brand ActiveX will include ETF launches from these managers.
"There is absolutely no constraint on the boutiques to launch a product. We partner with them, they make their own decisions. I expect most of them will like to launch at least one of their funds though an ETF," Saines said.
ActiveX will aim to give self-directed clients access to the managers' popular active funds - but the adviser channel remains vital, Saines said.
"I believe, over the time, this will lead to a quite profound shift in the diversification particularly for self-managed super funds (SMSFs) and other self-directed investors. They are usually under-allocated to fixed income and that's partly because it's been hard for them to access quality fixed income investments," he said.
"I expect that advisers will use exchange traded instruments to implement their advice. Advisers have to fill out a lot of forms which is time consuming and inefficient. So they can implement their advice through a listed implement much more quickly."
Challenger worked on the ActiveX idea for about a year before making an announcement at an investor forum yesterday. The Fidante Partners team that worked on the ETF series includes people who have helped launch ETFs and LICs in the past, Saines said.
"One of the issues with exchange traded ETFs, and this goes for listed companies is that investor disclosure is very important. If you are an active fund manager, the composition of your portfolio is really your intellectual property," Saines said.
"So most active managers will jealously guard it because they don't want their competitors to be able to replicate their performance. The Australian regulations are such that disclosure is required but that only has to happen with deferred basis and so it means that portfolio managers are comfortable to have their products sold through this additional channel/format. While they still meet the disclosure obligations, it is done in a way that is a happy medium and it is something the managers are comfortable with."