Fund rebates fees in 'message' on greed
Australia's second-biggest infrastructure investor says it will return millions of dollars in fees to investors globally to differentiate itself from for-profit rivals.
With the financial sector under pressure following revelations of misconduct heard by the royal commission, IFM Investors on Tuesday said it had higher-than-expected earnings in the year to June 30 and would return fees to keep its profit margin below 25 per cent.
"We want to send a very clear message to our investors, and indeed, our competitors, we are determined to set world-class standards that genuinely put investors first," IFM chief executive Brett Himbury said in a statement.
The infrastructure-centric fund manages about $107 billion for 312 institutional investors in 19 countries, including sovereign wealth funds, endowment funds and insurers.
The rebate, equivalent to 7.5 per cent of all investment management fees paid over the past 12 months, amounted to tens of millions of dollars, Himbury added without giving a specific amount.
The ongoing quasi-judicial royal commission into Australia's financial sector has found that some firms managing funds within the country's $2.6 trillion pension system may not be putting customers' interests ahead of their own.
The commission last month criticised pension funds run by NAB and Commonwealth Bank for regulatory breaches including overcharging customers.
The commission's final report due next year could recommend major changes to financial regulations to ensure the compulsory superannuation system is properly managed for the benefit of savers.
While industry funds like IFM face criticism for having union representatives without investment experience on their boards, their lower fees mean they often produce better returns for customers over the long term than so-called retail funds owned by large firms.
"A lot of (asset managers) ... are outperforming financially, but they are not necessarily outperforming for their members," Himbury told reporters.
"That sort of behaviour needs to stop for the benefit of the people whose money it is."
IFM is owned by 27 large pension funds.
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