IFM Investors, Australia’s second-biggest infrastructure investor, will return millions of dollars in fees to investors – including six million members of industry super funds – in a move 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, which is owned by a group of industry super funds, manages about $107 billion for 312 institutional investors in 19 countries, including sovereign wealth funds, endowment funds and insurers.
It owns large infrastructure assets such as ports, toll roads, airports and shopping centres in Australia, Europe and North America.
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, Mr 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.
Industry funds that own IFM Investors – the largest being AustralianSuper – have faced criticism for having union representatives without investment experience on their boards. However, the royal commission uncovered little or no conduct that constituted misconduct or a failure to meet community standards and expectation.
The New Daily, which is also owned by the same group of industry super funds that own IFM Investors, was also scrutinised by the royal commission, with no misconduct or failure to meet community standards found.
Industry funds generally have lower fees than retail funds, a fact that contributes to the better returns they achieve than so-called retail funds, many of which are owned by big banks.
“A lot of [asset managers] … are outperforming financially, but they are not necessarily outperforming for their members,” Mr Himbury told reporters.
“That sort of behaviour needs to stop for the benefit of the people whose money it is.”
IFM is owned by Industry Super Holdings, which also owns The New Daily.