The move from Viridian and CFS to provide personal advice in a scaled manner highlights a growing willingness within the industry to fix its own problems in lieu of waiting for the government.
Private markets are worth around $14 trillion globally, ASIC believes. It’s not sure, and that uncertainty hints at the wider problem – private markets, and their effect on public ones, is still largely a mystery.
Quoted funds powering Mainstream
Investment and superannuation service provider Mainstream Group (ASX: MAI) reported a 20 per cent yearly rise in funds under administration this week. The company, which has broadened its services from traditional administration including application forms and tax reporting, to complementary businesses lines like custody and superannuation, is riding a tailwind of structural growth.
Founded in 2006 by Byram Johnston and Martin Smith, the company is at the cutting edge of financial markets with its proprietary ‘quoted funds’ platform. This unique, in-house innovation allows fund managers to offer investors the opportunity to invest directly in their fund via the traditional application process, or to purchase the same units via the ASX.
This structural growth story, which is benefitting from ‘Wexit’, or the mass departure of financial advisers from the major banks and asset management firms, contributed to the group reaching $224 billion in funds under administration in 2020. The group saw 83 per cent growth in new investors, from 71,033 to 157,066 as an increasing suite of funds was made available on the ASX. In total, the group now administers over 1,202 funds globally, an increase of 19 per cent on 2019 numbers.
Magellan Financial Group, through their Airlie Australian Share Fund, and global disruption investor Loftus Peak, have been two of the early adopters of this new structure. It represents another twist in the finance sector, with the potential to disrupt the flow of capital onto investment platforms. The ability to purchase funds directly on the ASX, which tax reporting taken care of by Mainstream, may reduce the benefit of investment platforms.
Commenting on the trend, CEO Martin Smith says “Quoted Funds are gaining traction with fund managers because of the efficiency and improved investor experience. Managers can now access both listed and traditional fund distribution channels through a single fund structure via our single registry solution. 50% of the investors that Mainstream service are now invested in a Quoted Fund.”
