Fund Product, Company and Regulatory Updates as at 16 July 2019

Product Updates

BetaShares launches government bond ETF
The BetaShares Australian Government Bond exchange-traded fund (ETF) has been launched, providing access to Australian federal and state government income-producing bonds. Australian government bonds are considered an extremely secure ‘safe haven’ asset.

Blockchain super admin platform launched
GROW Super has launched its new distributed ledger technology for its superannuation administration platform. The platform, called TINA, is set to reduce costs and improve operational efficiencies.

Company Updates

Boutique fund manager Mhor Asset Management shuts down
Small caps boutique, Mhor Asset Management, has closed its only fund after it failed to take off. The fund had around $25 million at closing, mostly from retail investors, but failed to increase its funds under management and so has been closed. The Australian financial services (AFS) licence is in the process of being cancelled by request.

JP Morgan dumped at Funds SA after two decades as custodian
The longstanding relationship between Funds SA and JP Morgan has come to an end after 19 years. Northern Trust is the new custodian, selected after a long tender process.

Deutsche Bank traversing new ground
Tens of thousands of jobs are to be lost at Deutsche Bank after the chief executive, Christian Sewing, announced a global restructure and an exit from global equities functions of sales and trading. The company will retain an equity capital markets operation, while reducing global corporate and investment banking division risk weighted assets by 40 per cent. The fixed income operation will be reshaped.

The remaining business units will be corporate banking, investment bank, private bank and asset management.

The share price has bottomed out, with Sewing pledging to invest his own salary to help turn the bank around, with last year’s salary being around €7 million.

AMP adds Zenith and Quilla to MyNorth, launches new portfolios offer, publishes whitepaper
AMP has announced the following initiatives:

  • Added Zenith Investment Partners and Quilla Consulting to the MyNorth Managed Portfolio range as investment managers

  • Launched Partnered Managed Portfolios offer for advice practices seeking whole-of-portfolio solutions

  • Release of a whitepaper on managed portfolios (with the Institute of Managed Account Professionals (IMAP))

Hostplus in merger talks with Club Super
A Memorandum of Understanding has been entered into between Hostplus and Club Super regarding a possible merger.

CountPlus offloads conflicting SMA platform solution
The investment management of CountPlus separately managed account (SMA) platform solution has been offloaded to avoid product conflicts. The Privilege Managed Account platform is made up of seven portfolios offered to clients via HUB24, owned by CountPlus licensee, Total Financial Solutions. Morningstar is to take over the investment management of the seven model portfolios, paying $1 million.

Regulatory Updates

ASIC cancels AFS licence of Australian Mutual Holdings Limited
The AFS licence of Australian Mutual Holdings Limited has been cancelled by the Australian Securities and Investments Commission (ASIC) after the joint executive officers and directors were banned from providing financial services for six years. Jeffrey Worboys and Matthew Barnett were found to not have exercised the degree of care and diligence required, and failed to act in the best interests of the Courtenay House Capital Investment Fund, operated by Australian Mutual. The funds and entities closing as a result include:

  • Australian Pink Diamond Fund

  • Grange Capital Management Growth Plus Fund

  • Accelerated Trend Hedge Fund

  • Courtenay House Capital Trading Group Pty Ltd

  • Courtenay House Pty Ltd

ASIC offering fintech more flexibility
A new bill has been introduced to Parliament to enhance the regulatory sandbox for fintechs, to allow greater options for testing products and services, and for longer. The enhanced flexibility is to help businesses confirm concepts past the initial market test and prior to seeking licences from ASIC.

ASIC increases licence application requirements, including advisers
ASIC is now requesting more historical information from Australian financial services licence applicants. Responsible managers may have to produce a national criminal history and bankruptcy check that is no more than a year old, and two recent business references.

Financial advisers will be required to produce non-core proofs of compliance arrangements, programs for monitoring supervision and training, and a risk management statement. Life insurance companies and underwriters must provide a life insurance capacity statement and underwriting agency capacity statement respectively.

The increase in information provided is designed to establish if an applicant is likely to contravene legislative obligations and offer financial services efficiently, honestly and fairly.