High fund returns transient: report

The funds management industry must change from being bull market-based if it's to remain profitable, according to a new KPMG and Create Global Investment Management report. While the Australian industry is optimistic following the release of high 2003-04 returns figures this week, the report argues its current model won't work in times of low returns. KPMG says that while the profitability of funds managers has improved over the past year, it won't last and there appears to be “undue optimism” about the future. Major changes taking place in the global industry include a reduction in the number of fund products offered and increased use of external alliances – trends which have been evident in Australia for some time.