ASIC, the key stockmarket and investor corporate watchdog, is putting fund managers on notice about the accuracy of their marketing.
In a statement released on Wednesday, ASIC said it would be intensifying its surveillance of managed fund marketing, looking out for any misleading material about fund performance and risk.
It said it had already started surveillance of media marketing of funds, including search engine advertising targeted at retail investors.
“ASIC has broadened our managed fund surveillance, as retail and unsophisticated investors continue to grapple with historically low yields alongside the outlook of even greater global risks and uncertainties,” ASIC deputy chair Karen Chester said in the statement.
“ASIC remains concerned that managed fund promoters continue to target consumers, particularly retirees or those planning for retirement, with ambiguous or misleading performance and risk representations.”
Ms Chester said that if ASIC found instances of misleading marketing it would take “prompt action”, which could include enforcement action if warranted.
The regulator ASIC says its concerned that against a backdrop of low returns and volatile market conditions, consumers such as retirees could be misled about the performance and risks of managed funds.
(That sounds a bit late seeing the record low interest rates have been around for a couple of years and the chase for yield by investors at all levels has been well reported, warned about and documented).
ASIC reminded fund managers they should be following its current regulatory guide which controls what can and can’t be said in ads about performance etc.
ASIC said managed funds promoters should ensure they are familiar with the principles and guidance set out in the guide, including:
- Marketing must give balanced messages about returns, features, benefits and significant risks.
- Risk disclosure needs to be clear and prominent.
- The safety, reliability or security of an investment should not be overstated.
- Comparisons with other products or benchmarks must be appropriate and reasonable.
- Any reliance on past performance must explain that it is not indicative of future performance.
- Care must be taken with the use of images, graphs and tables to ensure they are not confusing or misleading.
- The physical limitations of a medium are no excuse for misleading marketing.
ASIC also reminded investors and managers that it had already brough three actions against fund managers – Mayfair 101 Group, La Trobe Financial Asset Management and the Skyring Fixed Income Fund.
