Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 92

A fund manager’s perspective on ASX’s mFund

In September 2014, the ASX launched its new Managed Fund Settlement Service (mFund) initiative. mFund enables investors to buy and sell units in unlisted managed funds through an ASX broker. The service replaces traditional paper-based processes and uses the same electronic system (CHESS) as for settling ASX share transactions. There are many expected benefits for investors, including diversification, efficiency, convenience, and speed.

Expectation of a ‘slow burn’

Ibbotson decided to participate from the start because developing multiple ways to access our products puts investors in control, opening a wide range of professionally-managed investments in a way that works best for them. We’re confident investors will embrace this way of investing in managed funds, enjoying the same paperless investment experience they have with share trading.

The ASX’s marketing strategy is focused towards its large and engaged following of self-directed investors who seek the control and efficiency that mFund has been designed to offer. We consider this channel to be distinct from investors who engage with a financial adviser.

Our expectations are realistic and it’s our belief that mFund will be a relatively slow burn. But what new investment initiative takes off overnight? Managed accounts have been available in Australia for well over a decade, and have only recently gained meaningful traction. It’s a similar story for Exchange Traded Funds.

Ibbotson received flows as soon as the initiative launched, so our initial experience has been positive. We’ve also supported the ASX’s marketing efforts by participating in a national road show with events for both advisers and investors. This was an opportunity to gather valuable information about the type of investors most interested in mFund. This insight will enable us to enhance our marketing and distribution plans to leverage the momentum of the launch.

Sorting out the technology issues

Becoming a foundation member was a learning curve for all involved. From a technology perspective, the key decision was whether to build an in-house CHESS interface based on CHESS open interface specifications, allowing us to act as a Product Issuer Settlement Participant (PISP), or whether to engage with an external service provider to act as our PISP. We chose the outsourcing route, leveraging the existing CHESS interface of our chosen service provider, MainstreamBPO. This reduced the technology burden significantly.

We settled on the sub-registrar model for integrating mFund into our existing operational processes. As part of its PISP role, MainstreamBPO maintains a sub-register of all investors accessing our products through mFund. MainstreamBPO aggregates transactions originating through mFund and pushes these through to our master registry. We adopted this model with little or no disruption to our existing unit pricing and investment administration processes.

We also had to make minor adjustments to the Product Disclosure Statements for the funds offered through the mFund service, as well as implement additional reporting capabilities to the ASX before going live. Future participants will benefit from the issues resolution foundation members have been through with the ASX and the various PISPs.

With brokers responsible for ‘know your client’ checks and our PISP, MainstreamBPO, responsible for processing applications, our role is to invest the application monies. This has not generated hard cost savings, but has produced efficiency gains.

Why are some brokers and fund managers not involved?

As more investors take control of their investments, particularly via SMSFs, they’ll look for easy and cost effective ways to access investment solutions which diversify their portfolios. mFund provides savings for investors, enabling them to avoid wraps and platform administration fees.

It’s stating the obvious that those fund managers with aligned platforms and wraps have not yet embraced mFund. They have an established distribution channel to their target audience, and so are in a position where they can wait, watch, and monitor flows. Similarly, a key determinant of mFund’s success will be the extent to which investors demand the mFund capability from their online brokers.

A bigger pull (or push) factor will be needed to attract these players, which will take time to play out.

 

Helena Hill is Product and Communications Manager at Ibbotson Associates.

 


 

Leave a Comment:

RELATED ARTICLES

Is Magellan's listed fund a game changer?

ASA’s view on the banning of LIC commissions

Five features of a fair performance fee, including a holiday

banner

Most viewed in recent weeks

Raising the GST to 15%

Treasurer Jim Chalmers aims to tackle tax reform but faces challenges. Previous reviews struggled due to political sensitivities, highlighting the need for comprehensive and politically feasible change.

7 examples of how the new super tax will be calculated

You've no doubt heard about Division 296. These case studies show what people at various levels above the $3 million threshold might need to pay the ATO, with examples ranging from under $500 to more than $35,000.

The revolt against Baby Boomer wealth

The $3m super tax could be put down to the Government needing money and the wealthy being easy targets. It’s deeper than that though and this looks at the factors behind the policy and why more taxes on the wealthy are coming.

Meg on SMSFs: Withdrawing assets ahead of the $3m super tax

The super tax has caused an almighty scuffle, but for SMSFs impacted by the proposed tax, a big question remains: what should they do now? Here are ideas for those wanting to withdraw money from their SMSF.

Are franking credits hurting Australia’s economy?

Business investment and per capita GDP have languished over the past decade and the Labor Government is conducting inquiries to find out why. Franking credits should be part of the debate about our stalling economy.

Here's what should replace the $3 million super tax

With Div. 296 looming, is there a smarter way to tax superannuation? This proposes a fairer, income-linked alternative that respects compounding, ensures predictability, and avoids taxing unrealised capital gains. 

Latest Updates

Investment strategies

9 winning investment strategies

There are many ways to invest in stocks, but some strategies are more effective than others. Here are nine tried and tested investment approaches - choosing one of these can improve your chances of reaching your financial goals.

Planning

Super, death and taxes – time to rethink your estate plans?

The $3 million super tax has many rethinking their super strategies, especially issues of wealth transfer on death. This reviews the taxes on super benefits and offers investment alternatives.

Taxation

Raising the GST to 15%

Treasurer Jim Chalmers aims to tackle tax reform but faces challenges. Previous reviews struggled due to political sensitivities, highlighting the need for comprehensive and politically feasible change.

Shares

The megatrend you simply cannot ignore

Markets are reassessing the impact of AI, with initial euphoria giving way to growing scepticism. This shift is evident in the performance of ASX-listed AI beneficiaries, creating potential opportunities.

Gold

Is this the real reason for gold's surge past $3,000?

Concerns over the US fiscal position seem to have overtaken geopolitics and interest rates as the biggest tailwind for gold prices. Even if a debt crisis doesn't seem likely, there could be more support on the way.

Exchange traded products

Is now the time to invest in small caps?

With further RBA rate cuts forecast this year, small caps may be key beneficiaries. There are quality small cap LICs and LITs trading at discounts to net assets, offering opportunities for astute investors.

Strategy

Welcome to the grey war

Forget speculation about a future US-China conflict - it's already happening. Through cyberwarfare and propaganda, China is waging a grey war designed to weaken democracies without firing a single shot.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.