mFund from ASX Roadshow
Recently we were invited to present at a roadshow put on by the ASX focussing on mFund. The goal was to educate DIY investors on mFund in general and highlight the benefits of diversification.
We showed off how to track and report on mFunds in Sharesight, whilst a number of well-known fund managers talked about their global strategies.
If you don't know what an mFund is, you should educate yourself now. We believe take-up will be significant to the point of mFund becoming an industry mainstay.
Today there are around 100 funds available from high calibre managers such as AMP, Schroders, PIMCO, and Legg Mason. This means that via online brokers, such as CMC Markets, you can buy and sell managed funds online just as you would a few shares of BHP. This is possible. Today.
Enter Sharesight. As investors add mFund to their portfolios, they need a way to administer, track, and report on them. And since mFund by their very nature are not available on platforms and wraps, Sharesight is the ideal solution.
mFund take-up is growing steadily -- we're seeing this first-hand inside Sharesight portfolios. This is a major win for DIY investors and financial advisers.
DIY investors
For retail investors (like me) mFund opens up a whole new world of active management. What used to be professional-only ($1M minimum) strategies such as fixed interest, emerging markets, infrastructure, and small caps are all now just one click away.
Yes, ETFs can give you similar exposure, but if you wanted active management then you had to pay a middleman. For the portfolios on Sharesight, we see significant exposures to overseas markets and non-traditional asset classes -- but -- a significant portion of that money is sitting in passive structures.
Plus, there's virtually no paperwork involved since the units are held by ASX CHESS. I recall first moving to Australia and trying (and failing) to invest a small amount of money in a fund online. I was shocked that in the land of compulsory superannuation there was no way to buy a fund online!
We expect mFund (alongside ETFs) to form the bedrock of SMSF portfolios.
Financial advisers
Every time we sit down with financial planners (usually IFAs), we hear the same two things:
One, they're moving clients off platforms. If the only reason a client's assets are sitting on a platform is for on-going admin and reporting, then that client's money is being wasted. Advisers know this. So they're searching for alternatives like Sharesight. Access to managed funds used to be a valid reason for keeping a client on a platform, but with the introduction of mFund + Sharesight that no longer holds true.
Two, they're looking for a flexible advice model. Some clients need end-to-end financial advice, some are self-directed but need guidance, and some are totally DIY, save for a little bit of "tuck pointing" on an annual basis.
Since mFund are available to both the adviser and his clients, the adviser is no longer forced to act as the asset-gatekeeper. An investment strategy can be driven by the professional, the client, or by both. This way the advisers' interests are totally aligned with their clients.
Access to certain asset types and the software used to track portfolios used to justify the tolls we had to pay. Fortunately for our bottom lines that's begun to change.
Note: ASX will be hosting a similar event for financial advisers in July. Stay tuned to our blog and Twitter feed for details.
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