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

Which generation had it toughest?

Each generation believes its economic challenges were uniquely tough - but what does the data say? A closer look reveals a more nuanced, complex story behind the generational hardship debate. 

100 Aussies: seven charts on who earns, pays, and owns

The Labor government is talking up tax reform to lift Australia’s ailing economic growth. Before any changes are made, it’s important to know who pays tax, who owns assets, and how much people have in their super for retirement.

The best way to get rich and retire early

This goes through the different options including shares, property and business ownership and declares a winner, as well as outlining the mindset needed to earn enough to never have to work again.

A perfect storm for housing affordability in Australia

Everyone has a theory as to why housing in Australia is so expensive. There are a lot of different factors at play, from skewed migration patterns to banking trends and housing's status as a national obsession.

Chinese steel - building a Sydney Harbour Bridge every 10 minutes

China's steel production, equivalent to building one Sydney Harbour Bridge every 10 minutes, has driven Australia's economic growth. With China's slowdown, what does this mean for Australia's economy and investments?

Supercharging the ‘4% rule’ to ensure a richer retirement

The creator of the 4% rule for retirement withdrawals, Bill Bengen, has written a new book outlining fresh strategies to outlive your money, including holding fewer stocks in early retirement before increasing allocations.

Latest Updates

Economy

The ‘priced out generation’ and what they should do about it

A fiery interview on housing exposed deep generational divides, sparking youth outrage and political backlash. As homeownership drifts out of reach, young Australians face a choice: fight the system - or redefine success.

Taxation

Maybe it’s time to consider taxing the family home

Australia could unlock smarter investment and greater equity by reforming housing tax concessions. Rethinking exemptions on the family home could benefit most Australians, especially renters and owners of modest homes.

Superannuation

Meg on SMSFs: Ageing and its financial challenges

Ageing SMSF members can face issues funding their pension income as cash reserves dwindle. Potential solutions include involving adult children in contributions to secure future financial stability.

Economy

US earnings season was almost too good to be true

The second quarter US earnings season has wrapped up, with a record 82% of S&P 500 firms beating earnings estimates. As tailwinds fade, Q3 may reveal whether AI momentum can offset rising economic headwinds. 

Gold

Does gold still deserve a place in a diversified portfolio?

9,000 years and no devaluations later, gold is the world’s most enduring store of value. It remains attractive as the value of several paper currencies, including the US dollar, are threatened by deficits and rising debt.

Shares

Checking in on the equity market's silent engine

Consumer spending directly impacts corporate earnings, sector performance and market sentiment. The latest data from different economies uncover risks and pockets of opportunity for investors.

Fixed interest

6 key themes driving bond markets

The Fed could soon be prompted to join other central banks in cutting interest rates. This would have ripple effects across global fixed income markets and provide an especially attractive backdrop for emerging market bonds.

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.