Surveillance by the Australian Securities and Investments Commission (ASIC) has led 18 funds to voluntarily amend their marketing material after the regulator found concerns including inadequate warnings and downplaying risks.
The managed fund surveillance by ASIC was conducted in October 2021 to examine performance and risk representations in managed fund marketing. It found some fund managers needed to do more to ensure the investment performance representations in their fund’s marketing were appropriate.
As a result, 13 responsible entities or trustees of investment funds voluntarily amended their marketing materials or practices across 18 funds. This included nine registered funds and nine unregistered funds with $1.4 billion in assets under management.
Concerns included inadequate warnings or disclaimers about past or future performance, comparing the product to lower-risk products, indices or benchmarks and the downplaying of other risks when promoting fund benefits.
The funds were:
- The OTG Capital Asset Backed Investment Trust
- ASCF Premium Capital Fund;
- ASCF Select Income Fund;
- ASCF High Yield Fund;
- The Balmain Discrete Mortgage Income Trust;
- BetaShares Australian Quality ETF;
- Wealthlander Diversified Alternative Fund;
- CFMG First Mortgage & Income Fund;
- CFMG Land and Opportunity Fund;
- Collins St Value Fund;
- TAMIM Fund Credit;
- FirstMac High Live;
- Truepillars Investment Trust;
- The Venture Crowd Trust No. 0481;
- Venture Crowd Trust No. 0505;
- UGC Global Alpha Fund;
- UGC Platinum Alpha Fund; and
- Wentworth Williamson Stable Income Fund.
ASIC noted neither ASIC or a court had made any findings that the marketing was in breach of the law and the entities had not made any admissions of guilt or liability.
ASIC’s deputy chair Karen Chester said: “Our primary concern here is retail investors and potentially unsophisticated wholesale investors, especially retirees, making important investment decisions based on marketing that does not accurately represent fund performance.
“Investors are entitled to accurate information about the products they may decide to invest in. Responsible entities, trustees and investment managers must ensure that they don’t stray into ‘fair weather’ marketing.”
ASIC said it expected all responsible entities, trustees and investment managers to be familiar with the principles and regulatory guidance about marketing of managed funds and other financial products, including that:
- Marketing must give balanced messages about returns, features, benefits and significant risks;
- Risk disclosure needs to be clear and prominent;
- The safety, reliability or security of an investment should not be overstated;
- Comparisons with other products or benchmarks must be appropriate and reasonable;
- Any reliance on past performance must explain that it is not indicative of future performance; and
- Care must be taken with the use of images, graphs and tables to ensure they are not confusing.
