ASIC names 5 funds over marketing concerns
The Australian Securities and Investments Commission has named five managed funds with which it has concerns over marketing.
The regulator said the concerns had emerged as a result of a surveillance.
| Responsible Entity | Fund |
| Equity Trustees Limited (ACN 004 031 298) |
Allan Gray Australia Stable Fund ARSN 149 681 774 Dent Sector Fund |
| Melbourne Securities Corporation Limited (ACN 160 326 545) | Funding Investment Trust ARSN 616 185 279 |
| Primary Securities Limited (ACN 089 812 635) |
Maxiron Monthly Income Trust ARSN 618 038 609 |
| The Trust Company (RE Services) Limited (ACN 003 278 831) |
Eley Griffiths Group Emerging Companies Fund ARSN 616 328 128 |
It said that, together, these funds have approximately $705 million in assets under management as at October 2022.
The regulator said that the marketing concerns ASIC identified varied across the funds. ASIC was concerned that the representations made were not consistent with long-standing regulatory guidance that:
- projected fund performance must be reasonable and include prominent and proximate qualification or warnings;
- promotion of fund benefits requires prominent and proximate balancing risk disclosure;
- comparisons of funds with other products must be appropriate and reasonable; or
- recommendations should be attributed and testimonials should be appropriate and reasonable.
In examining the quality of the responsible entities’ oversight of the marketing by their investment managers, ASIC identified a need for more robust marketing approval processes to ensure only approved advertising is used.
“As at the date of this media release, neither ASIC nor a court have made any findings that any of these responsible entities, or any persons or entities associated with these funds (listed in the table above), are in breach of the law. The entities have not made any admissions of guilt or liability,” the ASIC announcement said.
“In response to ASIC’s concerns, all the responsible entities voluntarily amended their marketing materials and practices. They also agreed to amend their compliance plans to enhance their approval and ongoing supervision of fund marketing. “
While the compliance plan modifications varied across the funds, they generally included requirements that:
- all marketing material be approved by the responsible entity prior to release;
- all dynamic digital advertising be thoroughly tested by the responsible entity prior to release;
- marketing material be vetted by external counsel prior to release;
- marketing material be regularly checked to ensure that it is digitally displayed as approved; or
- regular training of personnel involved in fund marketing be conducted.
‘We expect responsible entities to meaningfully supervise their funds management business,’ ASIC Deputy Chair Karen Chester said. ‘As managed fund gatekeepers, they need to monitor, supervise and ultimately approve the fund’s marketing to investors to ensure that it is accurate and reliable.’
So ASIC was concerned the Allan Gray Aust Stable fund wasn’t overloaded with loss making bonds? It’s been an excellent fund, performing well against the Vanguard Conservative Index fund (long term).
I want to see some of these Host plus done for the balance fund which is high growth and everyone knows it.. its in the financial review being called out yet ASIC do nothing
If these funds have marketing issues, then they must be called out. It would be great if ASIC actually provided full details of what was wrong instead of high-level fluff.
The one of interest for me is the Allan Gray Stable Fund. This fund has done very well historically and I don’t think anyone of reasonable mind could misconstrue what they do given they usually hold lots of cash. They also have a respected RE who should be across this stuff.
GIven the funds identified recently with issues, it looks like ASIC are going after funds with an income focus, lower market liquidity and also geared funds – areas open to funds being misleading to the public about risks. Clearly these sized funds are much easier targets than the big-end of super land where there are massive issues with misleading the public.
Yet it’s ok for an industry fund to advertise the fund only costs $1.50 per week to run…It’s all ok when they pay you of course corrupt ASIC.
The greatest superannuation marketing scam is union funds trying to hide who really controls them by calling themselves “Industry” funds.
The second greatest scam is union funds promoting “balanced” options which contain up to 94% growth assets.
Of course ASIC does absolutely nothing about this. It doesn’t suit their ideological agenda.
ASIC is corrupt until we see action against industry union super lies, mislabelling, conflicts, asset allocation mis-marketing and blatant ‘return’ falsification – all of which present a higher risk across many more average Australians to the tune of billions of dollars.
Just like Madoff, their ponzi scheme will end at some point and then ASIC will have blood on their hands (not on their conscience though, they’re ex-lawyers & public servants, they were born with none).