Australian managed accounts market update

Managed accounts in Australia at end September 2022 was estimated at $164 billion. It is estimated that about half of this was through separately managed account (SMA) model portfolios, with another 45% through managed discretionary account (MDA) model portfolios.

You can also re-visit Rainmaker Information's webinar reviewing the managed accounts and model portfolio market below.

The challenge for Australia’s investment managers is how can they access this market and what investment solutions may gain the most traction?

Seeking to explore this question, a Rainmaker Information study of more than 20 managed account investment menus available in the market at end 2022 identified almost 1100 unique model portfolios.

These model portfolios were available, on average, on more than two managed accounts menus each, resulting in the study covering almost 2800 managed account model portfolio managed account ‘points of presence’. Some models appeared on up to 10 investment menus.

There are two ways for investment managers to work with managed accounts. One, make their own model portfolios available on managed account platforms (where they manage the underlying investments themselves). Two, work with multi-manager model portfolios seeking to become one of the model’s underlying sub-advisory investment managers.

The important aspect of this for investment managers is that one-third of the 1100 unique model portfolios are multi-manager, meaning they are assembled by consultants, researchers, advice groups and platforms.

As these multi-manager model portfolios represent 40% of the model portfolio points of presence, the implication is these model portfolios are more likely to appear on more managed account investment menus.

Measured by which model portfolios have the most points of presence, the most widely available were operated by BetaShares, BlackRock, Morningstar, Lonsec and Sestante.

But the most actual multi-manager models were those operated by Lonsec, Morningstar, InvestSense, Russell and Innova.

• Points of presence refers to how commonly available models by these managers are across managed account investment menus.
• Unique models refers to discrete models which their managers seek to have made available on as many managed account investment menus as possible.

Of the 1100 unique model portfolios, half were multi asset class diversified modelswith almost another 40% being equities model portfolios. Almost one-quarter of all the unique models were indexed with 82% of these assembled on ETFs.

The study identified 80 unique ESG model portfolios. Only 7% of model portfolios are specialist ESG solutions.