Planning software holding back real return funds
Multi-asset real return funds are gaining popularity, but the shortcomings of financial planning software are limiting their uptake, says Lonsec senior analyst Stewart Gault.
Investors want the certainty of a real return above inflation - something that has not been delivered to investors in recent years by more traditional multi-asset class funds, said Gault.
"[Investors] want lower volatility and far better protection on the downside than what has been afforded under the more traditional multi-asset class model," he said.
While traditional multi-asset funds tend to have narrow 60/40 equities/fixed income allocations, real return strategies can 'go anywhere and do anything' and are not peer relative, Gault said.
But because multi-asset real return funds tend to have different risk profiles at various points in the cycle (sometimes they look like fixed income funds, and at other points they are heavily skewed towards equity market beta), they do not interact well with current financial planning software, he said.
Most of the current software has been set up around risk profiling 'buckets', said Gault.
"From what funds have been telling us, [their real return funds] don't fit into that pigeon-hole with the existing software.
"A number of the managers who have real return funds have been working very hard over a number of years with dealer groups that share a similar outlook on these types of strategies," Gault said.
"One of the areas that [the managers] identified very early was that the traditional software doesn't help in getting clients into these types of strategies. A couple of them have just gone off and developed their own software," Gault said.
Recommended for you
Marking off its first year of operation, Perth-based advice firm Leeuwin Wealth is now looking to strengthen its position in the WA market, targeting organic growth and a strong regional presence.
Financial services software firm Iress has unveiled a new business efficiency program with the aim of permanently lifting its profit margin as the business enters a leaner, growth-focused phase.
AUSIEX has revealed the top traded stocks for October, noting significant jumps in advised investor trading, while ETFs also reported higher activity.
The Financial Advice Association Australia has implored advisers to reevaluate their exposure to AML/CTF obligations ahead of new reforms that will expand their compliance requirements significantly.
