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Master funds growing

THE increasing dominance of master funds over older-style managed fund products has been confirmed by new data from research group Morningstar.

Its Australian Funds Market Report found that master fund assets grew to $137 billion at the end of September 2001, up 13 per cent over September 2000.

This represented 52.5 per cent of all retail managed fund assets.

Retail superannuation is invested overwhelmingly in master funds. The amount invested in superannuation master funds grew by 11.1 per cent to $84 billion, while the amount in other retail superannuation trusts declined to $16 billion.

Similarly, retirees are increasingly rolling their money into master funds. Pension master funds grew by 12.4 per cent to $30 billion, while older-style retiree products, such as deferred annuities, immediate annuities and approved deposit funds, continued to lose market share.

Insurance bonds and friendly society bonds also lost market share. The total amount invested in these products fell by 16.3 per cent to $8.8 billion.

Cash management trusts expanded strongly over the year, up 19 per cent to $29 billion, while other retail unit trusts declined in size to $49 billion. This reflected the sharp fall in equity markets in the September quarter.

Two consolidated manager groups extended their dominance of the industry.

Commonwealth/Colonial was the market leader with retail managed fund net assets of $42 billion, while National Australia/MLC had $36 billion of retail funds under management.

Collectively, these two groups had a market share of 30.1 per cent, up from 29.3 per cent one year earlier.

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