CFA Institute report calls for harmonised reporting in Asia Pacific
21 January 2013
News, Asia, Global
By Toby Garrod
A new CFA Institute study on "Periodic Reporting for Retail Investment Funds in Asia Pacific" finds that harmonised standards for reporting fund performance are needed to enhance investor protection and rebuild trust in the retail funds market. The finding comes close on the heels of a recent Global Market Sentiment Survey by CFA Institute, which identifies mis-selling by financial advisers as the top ethical issue in financial markets.
The "Periodic Reporting for Retail Investment Funds in Asia Pacific" report covers six markets including Australia, China, Hong Kong, India, Japan, and Singapore; and focuses on five areas including frequency of disclosures, fund fees and charges, fund performance, fund holdings and asset allocation, and disclosure of conflicts of interest and management discussions. The study was conducted with the support of CFA Institute member societies and industry practitioners in the six markets studied, along with comments from the Philippines, Pakistan, New Zealand, and Sri Lanka.
“The rolling out of the programme depends on the level of interest in the industry. It’s not necessarily something that regulators must do,” Lee Kha Loon, senior policy director, standards and financial market integrity, Asia Pacific, at CFA Institute tell Asia Asset Management. “It’s more about best practice, which means it’s good for associations. For example, the Investment Management Association of Singapore has done a very good job of detailing the principles, as well as some examples, of how to calculate expense ratio. Fund managers in Singapore are required to follow this standard. It is this kind of industry standard that we need to inform. Also, it’s not likely to be rolled out as a single standard, but rather a series of standards that cater to the various different areas we are talking about.”
“Ultimately, we do plan to present this to the regulators, but at this stage we first want to present our findings to the CFA members across the region. As such, this is a preliminary study identifying the key issues, rather than saying ‘this is what we should do’,” he says.
Mr. Lee goes on to note that the need for harmonisation is being driven by the increasingly complex investment environment facing retail investors.
“Investors should be able to compare and assess more accurately the spectrum of funds available and to make more informed decisions. A number of markets in the Asia Pacific region have introduced mandatory pension schemes that either require the contributor to select and invest in a family of funds, or permits them to invest a portion of their savings in such funds.
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