If you have read the fine print of any Australian financial products, you may notice references to a Target Market Determination (TMD). SG Hiscock is a multi award-winning boutique fund manager specialising in high conviction actively managed investment strategies and Managed Discretionary Portfolios. Here we will look at what TMDs are, why they’re required and how they may help to protect consumers.

What is Target Market Determination (TMD)?

A Target Market Determination (TMD) is a document that outlines the group or class of consumers (the target market) for which a financial product has been designed or for whom a financial product is likely to be appropriate (consistent with their likely objectives, financial situation and needs).

It is in place to assist distributors in understanding who the product is intended to be distributed to and outlines distribution conditions and restrictions as well as reporting requirements. It also describes the events or circumstances where the Target Market Determination for a financial product may need to be reviewed.

A consumer (or class of consumer) may intend to hold a particular financial product as part of a diversified portfolio. In this case, the product should be assessed against the consumer’s attributes for the relevant portion of the portfolio, instead of the consumer’s portfolio as a whole.

Note – The TMD document is not a Product Disclosure Statement and does not provide a full summary of the product features or terms of the product.

Why does a Fund Need to Have Target Market Determinations (TMDs)?

All funds are required to have TMDs in place for all relevant products, as part of the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Act 2021 which came into effect in October 2021. It is to make sure members are kept at the centre of the funds approach to the design and distribution of their financial products.

Why Were TMDs Introduced?

Financial products can be complex, there’s an endless array of providers, offers, conditions and sometime the jargon can be a challenge for everyday consumers to understand. The Australian Government frequently passes laws designed to help people better understand what they are signing up for or buying. A range of new laws were introduced in 2021, and these include the requirement for providers of most financial products to produce a Target Market Determination (TMD) for each of their products, and to make this available to anyone considering buying, investing in, or applying for their products.

If you require a TMD for a specific product, you should get in touch with the product issuer directly, or speak with your trusted fund managers, as they will be able to provide all the information and advice you need in a timely and professional manner.

Read The TMD Before Signing Up for a Financial Product

It is recommended that you read the TMD before purchasing, investing in, or applying for a financial product. It may help you to see what type of person or situation the financial product you are researching is intended for, and whether you fit into that category.

Portfolios of Global and Australian Equities Constructed for the Long Term

At SG Hiscock, our aim is to help our clients protect and grow their capital over the long term. Our team consists of a diverse group of experienced investment professionals. Our commitment to managing high conviction, concentrated portfolios of high-quality companies has delivered solid results for our clients for over 20 years. Our Australian small companies fund is designed for investors looking for a diversified portfolio of Australian small companies. To discover more about us or to begin your investment journey, get in touch with our friendly team today.