IMAP Awards: Raising standards

Perpetual kicks goals with Mainstream SMA

The judges of the 2019 IMAP Managed Account Awards were pleased with the quality of entries across the seven categories.

Judges praised the overall quality of finalists in this year’s IMAP Managed Account Awards, with Viridian Advisory taking out the coveted award for Licensee Managed Account.

Now in its second year, the awards ceremony took place in Sydney on 25 June, with the following winners announced across seven categories:

  • Australian Equities – Elston Asset Management
  • Australian Equities Small Cap – Macquarie Investment Management
  • International Equities – Watershed Funds Management
  • Multi-Asset Class – Soteria Capital
  • Australian Fixed Interest – Real Asset Management
  • Innovation – Praemium
  • Licensee Managed Account – Viridian Advisory

Speaking about the overall quality of entries for the 2019 IMAP Awards, judge Paul Saliba – Founder and Managing Director at Evolutionary Portfolio Services – said there was a wide variety of entries, with a large number of high quality submissions.

“It was pleasing to see so many businesses pursuing excellence in managed accounts and putting themselves forward to be judged for these awards,” Paul said. “We must continue to raise the standards to ensure that client outcomes are improved. This process has revealed that the industry is moving in the right direction towards more client-centric solutions.”

However, through the process of judging this year’s awards, Paul believed there were still a number of key areas that the managed accounts sector could improve on over the next couple of years.

“There needs to be increased sophistication around risk management and portfolio construction,” he said. “Also, there needs to be recognition that some asset classes are not conducive to being owned directly in managed accounts and so restraint is required. Just because something can be done, doesn’t mean it should be.”

He believed portfolios needed to be adequately diversified, meaning different things for different asset classes. 

“Direct fixed interest is an example where there are significantly different risks than what the asset class would provide through a more broadly diversified portfolio or what the benchmarks provide. I don’t believe it is an asset that should be a sole component in a portfolio as a managed account.” 

Paul said the judges were impressed by some of the systems and processes being used in managed accounts that were more “institutional than ever before”. He added that the level of rigour that some businesses were applying to their managed account offering was very impressive. 

However, Paul noted that the judging panel did identify a number of weaknesses with some of the submissions. Top of the list were businesses trying to do too many things.

“For example, running direct Australian and international equities, on top of other parts of the portfolio, is alarming, particularly if the resources to do so are simply inadequate,” he said.

“Moreover”, he added “while it is pleasing to see that there is a move away from financial planning practices running a managed account offering as a means of simply adding another fee for what they were already doing – managing client portfolios.”

Judging criteria

In terms of the judging criteria for these awards, the portfolio needed to be offered through a managed account structure with the following features:

  • Recognised legal structure – generally registered MIS, MDA, IDPS-like, IDPS model.
  • Investments directly held by or on behalf of each investor, i.e. not a pooled structure.
  • Model based.
  • Clear discretion held by the portfolio or investment manager.
  • Importantly, the portfolio also needed to have a clear objective and a benchmark.

For the Asset Class portfolios, the judges took into account:

  • Performance over time periods of one and three years;
  • Risk measures, including standard deviation and Sharpe ratio;
  • Weighted average cost of investment, both directly and considering the underlying investments; and
  • Qualitative criteria, including the resources available to the portfolio management organisation and the structure.

For the Licensee Managed Account category, the criteria applied to single sector portfolios, with the judges also considering:

  • The investment committee structure and resourcing;
  • The way in which the portfolios reflected the advice firm’s investment philosophy and appeared to be integrated with it;
  • How the managed account service fitted with the client proposition; and
  • Supporting materials, in particular, the client and adviser communications about portfolio management and portfolio changes.

The Innovation Award category recognised those activities that had been designed to improve the:

  • Operation and process of managed accounts;
  • Adoption by advisers and licensees;
  • Investment options;
  • Technology used to support managed accounts; and
  • Other functions the judges thought were worthy of recognition.

Judging panel

This year’s judges all had a deep understanding of the portfolio construction and investment selection process, through their experience on investment committees, in running managed accounts and fund portfolios, and through their hands-on involvement in the development of managed account portfolios.

The judging panel for the awards included:

  • Stuart Alsop – Head of Data Australia/New Zealand for Financial Express.
  • Angela Ashton – co-founder and director at Evergreen Consultants.
  • Nigel Douglas – Chief Executive Officer at Douglas Funds Consulting.
  • Brad Matthews – Founding Director at Brad Matthews Investment Strategies.
  • Dominic McCormick – Head of Investment Strategy/Portfolio Manager, Select Funds at Select Investment Partners.
  • Mark Oliver – Head of Managed Accounts, Macquarie Wealth Management.
  • Paul Saliba – Founder and Managing Director at Evolutionary Portfolio Services.

Following is a review of each category winner.

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