The case for considering an external responsible entity

Responsible entities (REs) are central to the governance and operation of managed investment schemes in Australia. They ensure funds are managed in accordance with legal requirements, investor mandates, and industry best practices.

- Alan O'Brien

Acting as fiduciaries, REs are legally obligated to prioritise the interests of investors, a responsibility formalised under the Managed Investments Act 1998. This legislation was introduced in response to historical fund failures and established the Single Responsible Entity model, which consolidates both asset holding and management functions into one accountable party.

REs are subject to strict oversight under the Corporations Act 2001, which outlines their duties, including compliance, disclosure, and governance—particularly when managing retail investment schemes. This regulatory framework ensures transparency, investor protection, and the integrity of Australia's fund management industry.

How many REs?

As of mid-2025, we estimate there were approximately 400 registered REs collectively overseeing approximately 3600 registered managed investment schemes in Australia, holding nearly $2 trillion in managed fund assets. A recent ASIC review found 50 REs alone were responsible for 45% of all registered managed funds and 47% of all registered managed fund assets.

Assuming a power-law distribution whereby the largest REs manage a disproportionately large share of schemes and assets, and coupled with our understanding of the RE landscape, Australia's financial service industry has a long tail of REs managing a small number of funds, and many acting as RE for only one scheme.