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12.6.2015 01:29 Age: 2 days

Australia: Cross-border distribution low despite initiatives


Only a small percentage of Australian fund managers have developed their off-shore distribution despite joint initiatives to promote international expansion from the Federal government and industry bodies, reports the Financial Standard.

Of the US$2.5 trillion in assets under management in Australia as at the end of December 2014, only US$90 billion were assets managed on behalf of non-residents by Australian fund managers - just 3.6 per cent, according to BNP Paribas Securities Services.

Initiatives such as the Asia Region Funds Passport, which is being heavily promoted by the Financial Services Council (FSC), are yet to have a great impact.

BNP Paribas Securities Services suggests that competing distribution vehicles designed for other jurisdictions such as UCITS will, however, contribute to cross-border distribution by local managers.

"The UCITS vehicle no longer just provides access to Europe's multiple markets through a harmonised, cross-border, EU regulatory regime," said BNP Paribas Securities Service chief administrative officer Daryl Crich. "It is now a truly global distribution vehicle."

Crich said the UCITS vehicle can be used for distribution in Latin America, the Middle East and Asia Pacific.

"It already has wide appeal among Chinese and Asian fund managers as a global vehicle for cross-border investment funds. As such, UCITs can provide access to China and its fund management industry which is estimated to triple in size to US$1.1 trillion this year."

Crich also said a key for local asset owners and managers when expanding is to have "an on-the-ground ability to understand and comply with the specific regulations of each jurisdiction.

"Regulations here and overseas are complicated and continually increasing. New frameworks such as UCITS V and the Alternative Investment Fund Managers Directive (AIFMD) mean distributors have to comply with more stringent rules."

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Australia: Cross-border distribution low despite initiatives.