Australia hits $5tn record for custodian-held assets

Assets under custody (AUC) rose to a record total of $5.04 trillion at the end of the 2024 financial year, driven by a surge in offshore investments, new data from Australia’s peak custodians and asset service provider body reveals.

The Australian Custodial Services Association (ACSA) recorded a 5.7% increase in AUC – a measure of assets overseen by a custodian, who acts on behalf of the investor clients for the purposes of either safekeeping or settling traded funds – in the six months to 30 June 2024.

More than a third of AUC, representing $1.8 trillion, was from Australian investors allocating to overseas assets – an 11.4% increase over the previous six months.

Australian-domiciled investments, meanwhile, saw a more modest increase of 3.0% to $3.2 trillion.

Assets held in Australia on behalf of offshore investors (or sub-custody assets) also saw a 4.4% increase to $2.2 trillion.

ACSA chief executive David Travers attributed the rise to a considerable bump in allocations to offshore investments, noting Australian investors have “taken advantage of investment opportunities and momentum building in offshore markets”.

Meanwhile, locally domiciled asset allocations have shown “greater stability in the asset levels”, he said, “with relatively small changes in assets under custody”.

Assets under administration also saw notable uplift of 7.1% over the six months to end of June, totalling $5.8 trillion in AUM.

Asset service providers, however, settled 2% fewer trades against the previous six months, with a total of 11.4 million trades – an average of 87,500 trades per day for ACSA members on behalf of clients.

Travers said ACSA and its members “remain focused on their response to regulatory change and evolving changes to market frameworks, such as global moves toward T+1, continued support for the ASX on CHESS and its replacement program, and local discussions on T+1”.

“Innovation, industry engagement and best practice solutions remain a critical focus for achieving efficiency in custody and investment administration.

“ACSA remains well placed to address the opportunities and challenges in the coming year through our working groups and dedicated industry volunteers,” he added.