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Education, Investments

Lack of education thwarts exposure abroad

The majority of Australian fund professionals believe in the importance of Australian investors increasing their exposure to overseas investments, but believe a lack of education is holding them back.

Asset management journal Funds Global Asia partnered with global funds transaction network Calastone to compile global research on the impact of technology and regulation on funds, which found that in Australia 94 per cent of respondents either strongly agreed or simply agreed it is important for Australian investors to diversify their exposure to managed funds that invest abroad.

This was endorsed in last year’s survey when 95 per cent agreed on the importance of exposure to overseas managed funds.

Presenting the research at the Calastone Connect Forum in Sydney last week, Funds Global Asia editor George Mitton explored why more funds are not sold that invest overseas despite the awareness of the importance of doing so.

“It’s an issue of market awareness, it’s an issue of do investors know what the options are,” Mitton said.

“Do they know what kinds of options could be in their best interests?”

The majority of Australian respondents (58 per cent) cited lack of education as the most significant factor preventing Australian investors from increasing their allocations to managed funds that invest abroad. This was an increase from 53 per cent in last year’s survey.

“The focus on education was even more pronounced this time around. Perhaps respondents have become even more convinced of the importance of educating their investors about the benefits of overseas investment,” the report said.

The second most popular option was tax or regulatory issues (22 per cent), while 8 per cent believed problems with the Asia region funds passport is the issue.

Elsewhere in the survey there is almost unanimous support for more regulatory action to improve transparency in the Australian industry, with 97 per cent agreeing it is necessary.

“The question is topical given the royal commission into banking that has examined the workings of superannuation funds in response to claims that customers have been charged excessive fees,” the report said.

“Perhaps mindful of the commission and the public outcry surrounding it, nearly all the respondents to this question said they felt regulators did have a duty to intervene for the purposes of transparency.”

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