ASX keen to list Managed Funds
One Friday afternoon, around 5pm I was attempting to transfer the units I held in the Colonial First State Geared Share Fund across to their Balanced Fund. The current exit price I was quoted was that of the previous day, however, because I was making the transfer after 5pm Friday the price at which I was to exit the Geared Share Fund would be Monday's exit price which I wouldn't know until at least Tuesday. When I entered into the fund in the first place I was also ‘flying blind' as to what entry price I would achieve after completing a prospectus and sending in my first cheque to the fund manager.
These are some of the inefficiencies in the process of buying and selling managed funds that the ASX is hoping to overcome by listing managed funds on the ASX. The proposal would allow investors to buy and sell managed funds as they would shares through a stockbroker, or over the internet via an online broker. Currently, approx 90% of retail managed funds are distributed via financial planners.
The benefits of listing managed funds would be greater distribution for fund managers, greater price transparency for investors and lower costs arising from a simplified buying and selling process. Fund managers will be wary of upsetting financial planning groups however, as they represent their greatest distribution by far.