A two-year study has shown that the Asia-Pacific region is by far the largest contributor to fund flows into Australian managed funds.
The report, Australian Investment Managers’ Cross-Border Flows, was released by the Financial Services Council and independent trustee, The Trust Company.
It was commissioned following the release of Mark Johnson’s landmark report of 2009, which recommended widespread changes to the way foreign funds were taxed in Australia.
Analysing the period from January 1, 2010 to 31 December 2011, investment in Australia via managed investment trusts grew by 54 per cent from $21.89 billion to $33.60 billion, with funds from Asia Pacific accounting for 68 per cent of fund flows, reaching $19.44 billion invested by the end of 2011.
Other key findings of the report include:
- Europe is the second largest contributor and accounted for 13.2 per cent of total fund flows, followed by the UK with 9.1 per cent.
- Australian property, Australian fixed interest and Australian shares were the top three contributors by asset class, with respective growth of 47.9 per cent, 44.2 per cent and 24.7 per cent.
- Investment by foreign sovereign wealth funds almost trebled over the period to $1.092 billion by the end of 2011.
- Overseas fund managers were the largest asset class as at the end of 2011, representing 55 per cent of assets, with overseas pension managers second at 18 per cent.
John Brodgen, chief executive of the Financial Services Council, welcomed the report and said government moves to reform taxation policy relating to Australian-domiciled funds had “substantially increased” fund flows.
Both the FSA and John Atkin, chief executive of The Trust Company, called for the Johnson Report to be fully implemented in order to allow closer engagement with capital markets.
Last month Johnson warned that tardiness in implementing reform was seeing Australia lose ground against Asian competitors in its plan to build a financial services hub.
Johnson quoted the Z/Yen Global Financial Centres Index, which showed Sydney’s global ranking as a financial services centre had fallen six places to fifteenth in the past five years.