SMA provider to award $20m mandate

A separately managed account provider will soon award a $15-20 million Australian equities mandate to a high conviction manager, but with a twist.

Agentia is working with portfolio construction consultancy InvestSense to reshape its Australian equities SMAs. It will restructure the SMAs as core plus investment portfolios and move from four fund managers to two.

Although the concept of core plus is well documented, Agentia and InvestSense see SMAs having one fund manager to oversee core investments and another manager to provide the 10 best ideas from its already concentrated investment strategy.

The $15-20 million mandate will be awarded as the plus or high conviction element to the SMA.

InvestSense director Jonathan Ramsay said the firm approached about 20 high conviction managers, asking them to manage an even more concentrated portfolio for the SMAs.

"It's quite a big ask because fund managers for a long time have operated on their own terms," he said.

"They've said this is my product, I'm going to build it and put it in a unit trust and you buy it or not.

"Most managers accept that this is a commercial reality and on the other hand this structure means there is a potentially higher margin opportunity opening up. To make it all work though, we, the managers and advisers have to get the communication piece right so investors understand up front what a more concentrated structure will look like and was the investing experience will be."

The new model, under an SMA structure, will be highly transparent and tell investors or advisers more about the fund manager's investment philosophy and strategy. Rather than working through a spreadsheet of 60 stocks, the plus portfolio can be easily communicated to clients - making it more engaging and potentially a value add for the adviser or fund manager, Ramsay said.

Agentia technical development manager Des Maher said the SMA business was spun out after 11 years running the licence for advice firm WB Financial. Australian equities portfolios became too costly and too cumbersome using only managed funds and for various reasons advisers struggled to keep up with portfolio changes suggested by the licensee.

"At the start of the GFC we realised that it could take up to a year for an adviser to implement important changes to all portfolios across their client base and most did not have the time, resources or research capability to pick fund managers themselves," Maher said.

This is where the SMA is much more efficient and tactile, he adds.

Read more: SMAinvestmentadvisersAgentiaInvestSenseinvestorsDes Maherfinancial adviceJonathan Ramsaymanaged accountsWB Financial
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