The Australian Custodial Services Association (ACSA) has revealed that total assets under custody for Australian investors jumped by 8 percent over the last six months of 2019 to 4.06 trillion.
Robert J Brown, chief executive of ACSA, explained that the figures [for total assets under custody for Australian investors] are a composite from ACSA’s custody members.
Brown said: “Key underlying client segments include superannuation funds, fund managers, insurance companies, wealth platforms, government entities plus major charities and endowments. Accordingly, the statistics represent net flows and market valuation movements across the institutional investment sector.”
ACSA’s total assets under custody for Australian investors showed that J.P. Morgan ranked top with AUD 866.7 billion in six months ending 31 December, representing a 7 percent increase compared to June 2019.
NAB Asset Servicing, Northern Trust, Citigroup, State Street, BNP Paribas, HSBC Bank, RBC Investor & Treasury Services, Ausmaq, Netwealth and BNY Mellon, also featured in the top 11 for total assets under custody for Australian investors.
Netwealth showed the biggest increase with 22.3 percent from its June figure of AUD 23.3 billion to AUD 28.5 billion at the end of December.
BNY Mellon took the largest hit with a decrease of 12.3 percent from AUD 28 billion in June to AUD 24.6 billion at the end of the year.
Assets held in Australia for foreign investors (sub-custody) increased by 3.9 percent to $1.80 trillion at the end of December 2019.
The total for sub-custody includes an additional ACSA member, and prior totals have been restated to reflect the change.
HSBC Bank topped the rankings for sub custody with AUD 1.2 trillion, followed by J.P. Morgan with AUD 243 billion, Citigroup with AUD 163 billion, BNY Mellon with AUD 70 billion, BNP Paribas with AUD 21 billion and NAB Asset Servicing with AUD 8 billion.
BNP Paribas saw the largest increase with 10.1 percent from June to December, while NAB Asset Servicing decreased 11.1 percent.
Commenting on the data, Brown said: “The bulk of total assets remains invested in Australia, although $1.23 trillion (just over 30 percent) is invested offshore. The data shows that increased exposure to offshore markets is a long-term trend for Australian institutions. The corresponding figure at December 2009 was $396 billion or 22 percent.”
Brown also highlighted that another trend is the appetite in some sectors for increased allocations to unlisted (private) assets, including equity, debt and infrastructure.
For example, for funds that disclose their allocation benchmarks, the APRA Quarterly MySuper Statistics for 31 December 2019 show unlisted equity allocation targets range from zero to 12 percent, Brown revealed.
He noted that the asset-weighted average was 3.5 percent as at the end of December last year.
He added: “Unlisted assets can be bespoke in the way they trade, settle, are valued and taxed. ACSA has work underway to better engage the broader market to improve systemic efficiency in custody and investment administration in response to these changing allocation patterns.”
