Fundamental – Issue four

Welcome to the latest edition of Fundamental. 

Over the past 12 to 18 months, there has been widespread talk in the commercial property industry about the impact of the Reserve Bank of Australia rate hikes on both transaction volumes and values. We are delighted to include in this edition an article from guest contributor Ben Martin-Henry, Head of Real Assets Research, Pacific at MSCI, which breaks down the market performance in some specific sectors. Interestingly, these cycles have been different to recent cycles such as the global financial crisis (GFC) and Covid in which values fell and then rebounded quickly. It has been a much slower (and, some might be surprised to hear, deeper) slowdown than was experienced in the GFC.
 
We have also been watching very carefully ASIC’s regulatory activity in recent months. We were pleased to see the Federal Government has shelved (at least for now) the previously mooted changes to the wholesale investor test. However, we are now very focused on ASIC’s regulatory activity around the design and distribution obligations (DDOs), which ASIC has identified as one of its strategic priorities.

In this edition, we discuss what we have learnt from ASIC’s successful prosecution against Firstmac and what it means for issuers and distributors. In some ways, it raises as many questions as it answers. And, in a very recent development, ASIC has just issued a new Report 795 Design and distribution obligations: Compliance with the reasonable steps obligation (REP 795), calling on product issuers to ensure distribution practices are up to scratch. We hope the report will provide industry with some much-needed guidance. The HW Funds team will shortly share an update on the key lessons and practical implications of REP 795 for fund managers.   

We hope you enjoy this edition of Fundamental.