Fund managers looking to participate in the SMSF arena need to clearly demonstrate value to SMSF investors, particularly through outcomes investors cannot replicate themselves, according to the chief of BT Investment Management (BTIM).
“If you’re offering a product that doesn’t differentiate much from what they can do themselves, they won’t be prepared to pay for it,” BTIM chief executive Emilio Gonzalez told selfmanagedsuper.
“You need to demonstrate clear value where they cannot do what you’re offering.
“In managed funds, global equities is the obvious one as it’s much harder to do, so that’s why a lot of global equity managers are targeting that space.”
Gonzalez’s comments came after BTIM last week announced its half-year results, reporting an $83.1 million boost in cash net profit after tax (NPAT) for the six months to 31 March, a 143 per cent increase on the previous corresponding period.
Statutory NPAT finished on $78.3 million for the half year, a 243 per cent rise.
Average funds under management reached $61.3 billion, an increase of 26 per cent compared to the previous corresponding period.
Gonzalez said while the company was pleased with its progress to date and its recent results, there were always challenges.
“Domestically, we are continuing to see margin pressure particularly within the institutional market space and the Australian equity market remains very competitive in terms of that space,” he said.
“Growth in SMSFs is also driving the growth in self-directed, DIY management, which to a large extent is disintermediating the value chain as people do it themselves and go direct, so it’s very important for us that we demonstrate our value proposition and we deliver to the end clients, particularly to SMSFs, what they see value in paying fund managers for to invest with us.”
BTIM had commenced identifying opportunities for income solutions, he said.
“Particularly [we are looking at] tax-effective income on a regular basis in an environment where term deposits have grown massively over the last few years and needs to find a new home in terms of interest rate decline,” he said.
“We’re looking at coming up with core solutions, rather than products, that give a greater level of certainty in that outcome that you can charge for because the benefits are clear for everyone to see.”
In June last year, he told selfmanagedsuper BTIM would concentrate on offerings for the SMSF market as it looked to blend investment bank innovation with its asset management capability.
The company was already focused on plans for the next three to five years that involved capturing more of the growing SMSF market through both the advised and non-advised segments, he said at the time.
