SMSFs continue to vex fund managers

Fund managers haven’t given up on gaining a foothold in the SMSF space – but the sector is proving a tough nut to crack.

Speaking at a recent State Street Asset Manager roundtable in Sydney, Aberdeen Asset Management managing director Brett Jollie said technology would be a “big enabler” for fund managers targeting the SMSF sector.

“The ASX managed fund service could provide another distribution opportunity for us if it gets off the ground, making our products available through the brokers that are aligned to the ASX,” said Mr Jollie.

Aberdeen will also be looking to align itself with larger financial advice providers that are currently building their own strategies around SMSFs, he said.

Mr Jollie admitted that SMSFs are never likely to take up managed funds in “a big way” since the main attraction of running a do-it-yourself fund is the ability to invest directly.

As a result, Aberdeen will not be promoting its core Australian equities products to SMSFs, he said.

“We think fund offerings like global equities, emerging markets, Asian equities, corporate and government bonds and even small cap funds are under-represented in SMSF investment portfolios,” said Mr Jollie.

But Russell Investments Asia Pacific chairman Alan Schoenheimer expressed his concern that an “explosion” in SMSF investors could lead to the delivery of substandard products.

“We’re going to have literally thousands of individual investors who can’t discriminate investments on quality,” he said.

“I think this could be a race to the bottom, in that you just serve up basically anything that’s cheap,” said Mr Schoenheimer.

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