ASIC tightens the screws on fund advertising

By Selina Nutley

In March 2022, ASIC announced it would continue its review of the marketing of managed funds, this time with a focus on misleading performance and risk representations. In a sign the regulator is becoming increasingly focused on modern advertising channels, it is carrying out this surveillance in conjunction with a dedicated cyber team who consider the marketing material along with the underlying search terms nominated by fund managers. ASIC has been clear it intends to broaden its net beyond retail investor activity to also scrutinise products targeting unsophisticated wholesale investors.

Form and substance

ASIC has just published what is likely to be the first in a series of media releases detailing the changes made by various trustees or responsible entities to marketing following approaches from ASIC. In a marked difference to previous media releases, ASIC has named each of the fund managers, as well as the products, in addition to detailing its concerns and the actions taken to address those concerns. Analysis shows ASIC has raised a wide variety of issues with both the form and substance of marketing material, including—

• inconsistency in the method of calculation of past returns
• absence and placement – location, clarity and prominence – of warnings
• use of comparisons or performance benchmarks not matching a fund’s strategy or asset profile
• representations about past returns which were out of date
• use of potentially confusing images, graphs and tables.