The Australian MDA (managed discretionary account) market continues to go from strength to strength with growth of more than eight per cent from June to December 2017, according to figures from IMAP, the Institute of Managed Account Professionals.
Total funds-under-management (FUM) for Australian MDAs stood at $25.47 billion as at 31 December 2017, up from $16.72 billion a year earlier.
So what is an MDA and why are they surging in popularity among clients and planners alike?
An MDA is an investment service through which an investment manager holds a portfolio of assets on behalf of a client and makes all the buy and sell decisions to generate a return. The decisions are made by the planner according to the initial strategy agreed upon with the client.
A key distinction between MDAs and ETFs (exchange-traded funds) or managed funds is that the assets are managed on an individual basis rather than as a pool of investor assets.
MDAs have the advantage over ETFs and managed funds of providing a more tailored investment approach for clients.
MDAs can invest in a broad range of assets including shares, options, fixed income, managed funds, cash and listed property.
MDAs are also often confused with SMAs (separately managed accounts). The main difference is that SMAs offer the same portfolio of assets to all investors (although the assets are individually owned), so are considered a product, whereas MDAs provide a more bespoke...