Better execution – Professionally co-ordinated centralised bulk trade execution is designed to minimise net buying prices and maximise net selling prices on transactions, compared to ad-hoc one-trades for separate clients outside the discretionary managed account environment.
Lower implementation drag – Extensive modelling has shown that quarterly review and execution of dynamic asset allocation decisions can increase portfolio returns by 0.30% to 0.40% per year relative to semi-annual adjustments, and by 0.50% to 0.80% pa relative to annual adjustments (after transaction fees and taxes, and averaged over a market cycle).
The discretionary managed account structure can enable clients to access to reduced managed fund fees, as the structure can eliminate the need for extra layers of fees for Responsible Entities and Custodians for directly managed assets compared to the same or similar assets managed inside unitised funds.
Cost savings as a result of brokers being able to charge lower brokerage, and no minimum brokerage on transactions, due to the volume available within a managed account structure.
Convenience and time saving
The managed account structure and process offers the convenience of enabling regular portfolio adjustments and rebalancing without the need for extensive paperwork and client execution of each transaction involved in the adjustment.
Portfolio adjustments and re-balancing can be carried out while clients are out of the jurisdiction or otherwise unable to be present to execute the necessary documents.
Enhanced likelihood of the portfolio achieving client objectives
Discretionary management reduces the extent and impact of emotion from the investment decision making process. This helps clients and their advisers adhere to their agreed strategy, and reduces the risk of clients jeopardising the likelihood of their portfolio achieving their financial goals, by succumbing to market and media pressures especially in extreme market conditions. In particular, in avoiding buying frenzies typically at the tops of booms, and selling frenzies at the bottoms of busts.
The process also reduces the temptation to buy into speculative products or fads without thorough research, perspective and portfolio context.
Managed accounts also provide flexibility to tailor a client’s portfolio to their individual circumstances, needs and existing holdings, while still providing the ability to benefit from dynamic allocation decisions, automatic regular adjustment and re-balancing.
The managed account process provides the ability to protect capital and minimise downside risk for clients – by being able to adjust quickly and efficiently to changing market conditions, in order to ensure the portfolio remains on the best path to achieve the client’s objectives.
But at the same time it provides a disciplined decision framework, driven by a professional robust investment research function, and centralised execution efficiency to make the changes required in a timely manner.
Other private wealth division services:
Expert, tailored money management solutions.
Structure your insurances to protect against anything tomorrow might bring.
Self-Managed Super Funds
A superannuation vehicle run by you, for you.
Comprehensive inter-generational wealth transfer planning.
Find out more