Morningstar Australasia Drives New Levels of Transparency for Australian Investors

November 15, 2017

SYDNEY, 15 November 2017 — Morningstar Australasia, a subsidiary of Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today announced its campaign to have asset managers take voluntary steps toward full portfolio holdings disclosure1, has had strong interim results.

Morningstar reached out to 142 managers over the last 18 months representing 43942 funds and approximately $563 billion of assets under management. With three options to choose from, 51 percent of managers opted for full disclosure across all products, 11 percent elected to disclose full holdings on a fund by fund basis, and 38 percent maintained their Top 10 disclosure policy. As a result, over $337 billion worth of assets under management (or 60 percent) is now showing in full for Australian-managed funds.

“The industry is essentially self-regulating,” said Anthony Serhan, CFA, Morningstar’s Managing Director of Research Strategy, Asia-Pacific. “With full portfolio holdings disclosure regulation for superannuation funds still to be implemented and no disclosure requirements for investment funds on the horizon, there was an opportunity to step in and facilitate a movement that brings greater transparency to the industry. Asset managers have responded in a constructive manner, which signals a fundamentally positive move for the investor.

“More than ever, consumers want to interact with brands and industries they can trust. With the growing use of technology comes an increased expectation around information and transparency. Exchange-traded funds, managed accounts and other managed investments already provide holdings transparency. This is a natural step for managed funds in Australia and will help expand the discussion with fund investors from performance to what they own.”

While full disclosure may be new territory for Australia, it is commonplace globally. As an otherwise sophisticated market, it is remarkable that Australia remains the only market with no implemented3 portfolio disclosure regime among the 25 analysed in Morningstar’s recently updated Global Fund Investor Experience Study4. This was one factor contributing to Australia’s Below Average rating for disclosure in the study. It also explains in part the growing number of asset managers voluntarily aligning with the global best practice on this issue.

“We worked with a small focus group of fund managers in the early days of the campaign including Aberdeen, Cbus, Franklin Templeton, JP Morgan, MFS, Nikko AM, Pengana, PIMCO, RARE, Fidelity and Vanguard. With many more joining the movement every day, our goal is to work with the industry toward 100% coverage and disclosure,” stated Serhan.

Full portfolio holdings data, where available, is accessible on Morningstar Direct (subscription only). This data is also used to power portfolio analytics available through the Morningstar Adviser Research Centre and www.morningstar.com.au.

About Morningstar Australasia Pty Limited and Morningstar, Inc. 
Morningstar Australasia is a subsidiary of Morningstar, Inc., a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individual investors, financial advisers, asset managers, retirement plan providers and sponsors, and institutional investors in the private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than US$220 billion in assets under advisement and management at 30 Sept. 2017. The company has operations in 27 countries. 

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Media Contact:
Australia/New Zealand
Merryn Stewart
+61 2 9276 4456 or
merryn.stewart@morningstar.com

1 Morningstar has been collecting full portfolios in Australia since 2002 to power fund analysis and portfolio construction tools. These portfolios were provided voluntarily on the basis that Morningstar’s client facing tools only listed the Top 10 holdings. After comprehensive industry consultation that started in April 2016, this is changing. More detailed information on PHD is available on request.
2 Made up of managed investment schemes, superannuation funds, ETFs.
3 ASIC Class Order [CO 14/443] extended the start of portfolio holdings reporting for superannuation funds to 2019 pending the finalisation of the relevant legislation and regulations.
4 Global Fund Investor Experience Study, October 2017

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