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1301.0 - Year Book Australia, 2005  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 21/01/2005   
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Contents >> Financial system >> Managed funds

The term 'managed funds' is used loosely in the financial community to embrace two broad types of institutions. The first are collective investment institutions (such as life insurance companies) which buy assets on their own account. The second are investment or fund managers which act as investment agents for the collective investment institutions as well as others with substantial funds to invest. Investment managers have relatively small balance sheets because most of the assets they acquire are purchased on behalf of clients. The significant growth in managed funds to 2000 (graph 26.22) eased during 2001 to 2003, and accelerated again during 2004. The main influence on this growth pattern has been share market prices.

Graph 26.22: MANAGED FUNDS, Consolidated assets - 30 June




Collective investment institutions

As the name implies, collective investment institutions pool the funds of many small investors and use them to buy a particular type or mix of assets. The asset profile can be structured to satisfy individual investor requirements regarding, for example, the degree of risk, the mix of capital growth and income, and the degree of asset diversification. Collective investment institutions comprise the following:
  • life insurance corporations
  • pension and approved deposit funds
  • public unit trusts
  • friendly societies
  • common funds
  • cash management trusts.

Funds of a speculative nature that do not offer redemption facilities - for example, agricultural and film trusts - are excluded.

To derive the total assets of collective investment institutions in Australia on a consolidated basis, it is necessary to eliminate the cross investment between the various types of institution. For example, investments by superannuation funds in public unit trusts are excluded from the assets of superannuation funds in a consolidated presentation.

Although statistics for each of these institutions were presented earlier in this chapter, the accompanying tables summarise their consolidated position (i.e. after the cross investment between the institutions has been eliminated). Table 26.23 shows their assets by type of institution and table 26.24 shows assets by type of investment.


26.23 ASSETS OF MANAGED FUNDS - 30 June 2004

Total
Cross invested
Consolidated
Type of institution
$m
$m
$m

Life insurance corporations(a)
202,880
30,930
171,950
Pension funds
464,764
83,785
380,979
Public unit trusts
188,085
27,182
160,904
Friendly societies
6,236
1,680
4,556
Common funds
9,687
389
9,298
Cash management trusts
32,386
-
32,386
Total
904,037
143,965
760,072

(a) Investments by pension funds which are held and administered by life insurance offices are included under life insurance offices.

Source: Managed Funds, Australia, June 2004 (5655.0).


26.24 MANAGED FUNDS, Consolidated assets

Amounts outstanding at 30 June

2002
2003
2004
Type of investment
$m
$m
$m

Deposits, loans and placements
70,455
72,358
85,906
Short-term debt securities
63,550
68,757
72,356
Long-term debt securities
62,620
67,374
66,563
Equities and units in trusts
225,912
224,052
282,779
Land and buildings
74,988
82,380
92,508
Overseas assets
127,933
119,419
137,164
Other assets
23,709
23,901
22,796
Total
649,166
658,241
760,072

Source: Managed Funds, Australia (5655.0).


Investment managers

Specialist investment managers are employed on a fee-for-service basis to manage and invest in approved assets on their clients' behalf. They usually act for the smaller collective investment institutions such as public unit trusts. They are not accessible to the small investor. Investment managers provide a sophisticated level of service, matching assets and liabilities. They act in the main as the managers of pooled funds, but also manage clients' investments on an individual portfolio basis.

A considerable proportion of the assets of collective investment institutions, particularly the statutory funds of life insurance corporations and assets of pension funds, is channelled through investment managers. At 30 June 2004, $503.4b (56% of the unconsolidated assets of collective investment institutions) were channelled through investment managers. Table 26.25 shows the total unconsolidated assets of each type of collective investment institution and the amount of these assets invested through investment managers.

Investment managers also accept money from investors other than collective investment institutions. At 30 June 2004 investment managers invested $230.2b on behalf of government bodies, general insurers and other clients, including overseas clients.


26.25 ASSETS OF MANAGED FUNDS, Invested through investment managers - 30 June 2004

Unconsolidated assets of managed funds
Assets invested with investment managers
Type of fund
$m
$m

Life insurance corporations(a)
202,880
136,324
Pension and approved deposit funds
464,764
232,242
Public unit trusts
188,085
95,314
Friendly societies
6,236
2,408
Common funds
9,687
9,203
Cash management trusts
32,386
27,933
Total
904,038
503,424

(a) Includes both superannuation and ordinary business.

Source: Managed Funds, Australia, June 2004 (5655.0).


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