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.

 

  •   12 December 2014
  •      
  •   

 

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

Retirement income expectations hit new highs

Younger Australians think they’ll need $100k a year in retirement - nearly double what current retirees spend. Expectations are rising fast, but are they realistic or just another case of lifestyle inflation?

Four best-ever charts for every adviser and investor

In any year since 1875, if you'd invested in the ASX, turned away and come back eight years later, your average return would be 120% with no negative periods. It's just one of the must-have stats that all investors should know.

Why super returns may be heading lower

Five mega trends point to risks of a more inflation prone and lower growth environment. This, along with rich market valuations, should constrain medium term superannuation returns to around 5% per annum.

Preparing for aged care

Whether for yourself or a family member, it’s never too early to start thinking about aged care. This looks at the best ways to plan ahead, as well as the changes coming to aged care from November 1 this year.

Our experts on Jim Chalmers' super tax backdown

Labor has caved to pressure on key parts of the Division 296 tax, though also added some important nuances. Here are six experts’ views on the changes and what they mean for you.        

Why I dislike dividend stocks

If you need income then buying dividend stocks makes perfect sense. But if you don’t then it makes little sense because it’s likely to limit building real wealth. Here’s what you should do instead.

Latest Updates

Investment strategies

LICs vs ETFs – which perform best?

With investor sentiment shifting and ETFs surging ahead, we pit Australia’s biggest LICs against their ETF rivals to see which delivers better returns over the short and long term. The results are revealing.

Retirement

The growing debt burden of retiring Australians

More Australians are retiring with larger mortgages and less super. This paper explores how unlocking housing wealth can help ease the nation’s growing retirement cashflow crunch.

The ASX is full of broken blue chips

Investing in the ASX 20 or 200 requires vigilance. Blue chips aren’t immune to failure, and the old belief that you can simply hold them forever is outdated. 

Shares

Buying Guzman y Gomez, and not just for the burritos

Adding high-quality compounders at attractive valuations is difficult in an efficient market. However, during the volatile FY25 reporting season, an opportunity arose to increase a position in Mexican fast-food chain GYG.

Investment strategies

Factor investing and how to use ETFs to your advantage

Factor-based ETFs are bridging the gap between active and passive investing, giving investors low-cost access to proven drivers of long-term returns such as quality, value, momentum and dividend yield. 

Strategy

Engineers vs lawyers: the US-China divide that will shape this century

In Breakneck, Dan Wang contrasts China’s “engineering state” with America’s “lawyerly society,” showing how these mindsets drive innovation, dysfunction, and reshape global power amid rising rivalry. 

Retirement

18 rules for ageing well

The rules to age successfully include, 'the unexamined life lasts longer', 'change no more than one-eighth of your life at a time', 'nobody is thinking about you', and 'pursue virtue but don’t sweat it'.

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.