ASIC scrutinises marketing of managed funds

The Australian Securities and Investments Commission (ASIC) has commenced surveillance into the marketing of managed funds, to identify the use of misleading performance and risk representations in promotional material.

The corporate regulator had recently taken enforcement action against fund managers for misleading or false advertising, including the Mayfair 101 Group, La Trobe Financial Asset Management and the Skyring Fixed Income Fund.

ASIC deputy chair, Karen Chester, said: “ASIC has broadened our managed fund surveillance, as retail and unsophisticated investors continue to grapple with historically low yields alongside the outlook of even greater global risks and uncertainties”.

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ASIC would scrutinise traditional and digital media marketing of funds, including search engine advertising, targeting retail investors and potentially unsophisticated wholesale investors, such as some retirees.

ASIC said it was concerned that, in the current highly volatile and low-yield environment, consumers seeking reliable or high returns were being misled about the performance and risks of the funds they were investing in.

This surveillance follows on from ASIC’s ‘True to Label’ initiative, which examined whether representations in fund labels might have misled consumers about the funds’ characteristics and underlying assets.

Chester said: “ASIC remains concerned that managed fund promoters continue to target consumers, particularly retirees or those planning for retirement, with ambiguous or misleading performance and risk representations.

“Where we identify fund marketing of concern, we will also review the corresponding product disclosure statements, websites and target market determinations to assess if the marketing claims are misleading.

“ASIC is committed to protecting consumers where misleading marketing practices run counter to their interests. If we identify misleading conduct, we will take prompt action to disrupt behaviours by deploying across our regulatory tools – from administrative intervention through to enforcement action if warranted.”

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This is absolutely laughable. Industry Funds have been doing exactly this for the past 20 years and have not had one slap on the wrist for it. ASIC turn a blind eye to it even allowing the publications like the AFR to publish league tables of the top performing funds where Hostplus's Balanced option with 93% allocated to Growth assets (confirmed in ASIC's own heatmap) is compared to other traditional Balanced options with as low as 60% growth assets. ASIC is clueless and a toothless tiger that has no idea how to protect the everyday person who has no understanding how this all works. Standardise risk definitions and bring in a numbering convention from 1-10. If the fund has 93% growth assets then it's a 9 out of 10 on the risk scale.

I hope La Trobes "Term Deposit" mortgage bond was cracked down on.

Hope Kazza also has union industry super in her sights? Not holding my breath, pretty sure ASIC will never give their mates a hard time for anything, even though we know their returns, reporting and advertising are all purposely misleading and erroneous.

ASIC sees itself as the union super business retention department. That's why they persecute professional advisers. Professional advisers are one of the few places consumers are likely to be told the truth about union super's relative performance, asset allocation, costs, and political affiliations.

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