Performance comes at a cost for CMTs
JB Were’s low cost structure has pushed its cash management trust (CMT) to the top of the performance tables in the CMT market.
According to recently released research by Lonsdale Securities, JB Were’s CMT returned 5.25 per cent in the last financial year. The $1.3 billion fund is also the top performer over the three years, recording 4.73 in the three years to June 30.
However, Lonsdale says there is only a slight variation in the overall markets due to the limited nature of investment options for CMT operators. For instance, the $5.6 billion Commonwealth Bank CMT was only three basis points behind JB Were for both the one and three year numbers. The Commonwealth is the second lowest fee-charging manager in the market and the only one who doesn’t pay advisers a trailing commission for recommending the fund to their clients.
Lonsdale warns that the higher performance comes at a cost in terms of the features offered by the products.
“The lower fees charged by these managers tends to be reflected in less product features,” the group says. “The Commonwealth and JB Were do not offer B Pay or internet banking for CMT investors and the CBA doers not offer a cheque book facility.”
Recommended for you
The Financial Advice Association Australia has released its pre-budget submission, including six key items to help reduce the cost of professional advice and increase its accessibility.
Phil Anderson, general manager for financial advice at the FAAA, believes the CSLR levy could reach $100 million if Dixon Advisory complaints are allowed to continue.
Proposed legislative changes to safe harbour duty could result in advisers having reduced professional indemnity costs, a joint submission by seven major licensees said.
With 66 per cent of newly established advice licensees being sole advisers, what are the risks and legal ramifications to consider when taking the plunge into self-licensing?