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The managed funds industry is a difficult one to measure because of the large amounts of financial interaction between collective investment institutions and fund managers, and between fund managers themselves. Consequently, double counting of funds which are 'churning' through the system is a difficulty which needs to be addressed in order to derive a true measure of the funds management industry. One approach is to take the consolidated assets of collective investment institutions (as given in graph 27.22), add to it those funds managed on behalf of other clients such as governments, corporations, charities, overseas clients and 'net-off' funds sourced from other fund managers. Table 27.23 provides this measure of the total funds management industry.
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 in ABS statistics comprise the following:
Funds of a speculative nature that do not offer sufficiently liquid 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 27.24 shows their assets by type of institution.
Investment managers are employed on a 'fee-for-service' basis to manage and invest in approved assets, on their clients' behalf. They 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. Investment managers offer their services to a range of clients, including superannuation funds, life insurance offices, corporations and high net worth individuals.
A considerable proportion of the assets of collective investment institutions are managed via investment managers. At 30 June 2007, $852.1b (64% of the unconsolidated assets of collective investment institutions) were channelled through investment managers. Investment managers also accept money from investors other than collective investment institutions. At 30 June 2007, investment managers invested $373.9b on behalf of government bodies, general insurers and other clients, including overseas clients.
Table 27.25 shows the total unconsolidated assets of each type of collective investment institution, and the amount of these assets invested through investment managers.