SQM to launch managed account benchmarks
Research house SQM has announced it will collect data covering managed account portfolios in response to industry demand.
The firm said it will now collect and collate data on investment returns and portfolio allocation data from the providers of managed accounts offered to Australian investors.
Monthly surveys sent to providers will be used to collate performance comparison tables with the intention for benchmarks in due course. The first set of comparisons are expected to be completed by the end of 2024.
Managing director Louis Christopher said data covering the managed account space is currently difficult to obtain, despite their popularity.
According to the Institute of Managed Account Professionals (IMAP), some $194 billion is held in managed accounts as of 31 December 2023. FUM in the six months to 31 December rose from $161 billion to $194 billion, a rise of 20.4 per cent which was attributed to growth from strong inflows of $15 billion and positive market gains.
Christopher said: “Returns data within the Australian managed accounts sector is currently difficult to obtain and verify, let alone conduct proper performance comparisons on. In my opinion, the lack of data remains one of the weaknesses in this sector which I believe will eventually inhibit sector growth if it were to persist over the medium term.
“We also understand that industry regulators are growing impatient with the lack of transparent and comparable managed account returns. Hence why we believe it’s important the industry acts now by offering better performance information in this sector.
“Given our position of rating a broad range of multi-asset SMA solutions, we have been contacted by key industry participants to kick off this initiative. I think from a ratings perspective as well, it is important SQM receive more frequent performance updates to ensure we meet our own AFSL obligations when monitoring rated managed accounts.”
Earlier this month, the Managed Accounts Research Report 2024 from VBP-owned Elixir Consulting and Lonsec, which surveyed 171 advisory firms including 561 financial advisers, found 52 per cent of advice businesses were using managed accounts.
The key benefits these practices reported were an enhanced value proposition and stronger client outcomes.
“Advisers can manage a large number of client portfolios in an efficient and professional way. They can adapt quickly to changing market conditions, seize timely investment opportunities and deliver potential tax savings, in accordance with a client’s investment strategy and wealth objectives,” the report said.
AUTHOR
Laura Dew
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