Copyright investmentnews
Macquarie sparked a fundie furore across the Tasman last week after revealing plans to de-platform more than 240 products from its superannuation wrap service at the end of March next year. The Australian financial services behemoth said last week it would close 243 funds to new super wrap money and automated plans by March 31 next year with the cull set to capture dozens of managers including Betashares, Daintree, Perennial and even cross-Tasman NZ outfit, Milford. But the high-stakes distribution play, which came after Macquarie agreed to cover A$321 million of investor losses in a product sold via the super wrap, has reportedly enraged Australian fund managers and financial planners. Geoff Wilson, founder and chair of Wilson Asset Management, told the Capital Brief website that Macquarie offered no explanation for the mass fund cuts across the platform. “It’s incredibly disappointing that a company I have viewed as being very sort of entrepreneurial and agile has gone the way of the dodo,” Wilson said in the Capital Brief report. “It’s naïve and illogical for a company that appeared to be focused on innovation.” Macquarie was a wrap pioneer in Australia, launching the service early this century at the dawn of the digital distribution revolution. However, the platform was caught up in a super product meltdown over the last year as investors in the Shield Master Fund held on the wrap faced losses of A$321 million. Late last month Macquarie agreed to reimburse the super wrap-based Shield investors in full for the losses but the manager still faces a court date after admitting to the Australian Securities and Investments Commission (ASIC) it failed to “act efficiently, honestly and fairly” in monitoring the now-collapsed property-based product. In a statement, ASIC said it would not seek a penalty for Macquarie after the firm agreed to cover the on-wrap Shield losses. As part of the post-Shield reforms, Macquarie also agreed with the Australian Prudential Regulation Authority (APRA), which oversees the super sector, to strengthen its wrap governance processes – possibly triggering the platform purge. Capital Brief and other Australian media outlets, however, report that Macquarie is poised to back down on plans to slash all fund managers with less than $300 billion in assets from the super wrap. The proposal “would cut most Australian fund managers from the platform, a significant distribution channel”, Capital Brief reported, noting that Magellan chief, Sophia Rahmani, had confirmed “positive” progress in talks with Macquarie. Even at its peak of about A$116 billion Magellan would’ve missed the Macquarie cut: the manager has about A$200 million sourced through the Macquarie super wrap. Magellan reported A$39.6 billion under management as at the end of September as net outflows from its flagship global equities fund slowed and positive flow contributions from the group’s Australian shares strategy and recently acquired stake in quantitative specialist, Vinva. In a speech at its AGM last week, Magellan chair, Andrew Formica, told investors the firm grew operating profit about 5.4 per cent year-on-year to reach almost A$160 million with “liquid capital” of A$563 million across the group. Formica also confirmed Peeyush Gupta would join the Magellan board next month as an independent director. Gupta is well-known on both sides of the Tasman as co-founder of the seminal IPAC investment and financial advisory business.
