By Jayson Forrest - Managing Editor  - IMAP Perspectives

Speaking about the overall quality of entries for the 2020 IMAP Awards, judge Amanda Munro CFA - Chair of the IMAP Portfolio Management Group - said there was a wide variety of entries, with a large number of high quality submissions.

“This year, IMAP received more entries than in 2019 and the number of entries has steadily increased over the three years IMAP has been running the awards, reflecting the maturation of this segment of the investment management industry,” Munro said.

“In the asset class and licensee categories, entries ranged from global institutions, to local boutique investment managers. While the former certainly offers greater depth of analyst resourcing and systems support, the latter, which includes some very experienced portfolio managers, demonstrated the ability to take advantage of their more nimble operations to design portfolios with particular client segments in mind. The winners came from both camps.”

Munro added what was particularly pleasing for the judges were some of the well thought out and articulated investment philosophies, with many supported by references to the academic research underpinning them. She said the quality and content of entrants’ investor communications was also generally of a high standard.

“The Innovation category deserves a special mention. Innovations submitted this year were plentiful and diverse, and in various stages of commercial development. Entrants are to be commended for their creativity in addressing some of the challenges in the managed account space, for example, the development of client customisable ESG filters and a downside protection overlay which can be flexibly applied to a portfolio,” Munro said. “It’s great that the IMAP Awards give these innovations a platform to be made known to a wider audience.”

However, overall, Munro thought a weakness of the submissions was perhaps in the lack of a specific focus on managed accounts and how the manager was able to add value via managed accounts.

“Some entrants were also let down by a lack of clarity in their descriptions of the investment process, while some teams were very small with apparent and unaddressed key person risk. It is IMAP’s intention to include questions asking managers to specifically address these issues next year,” she said.

“However, the entries across all the categories demonstrated that increasing customisation of portfolios within a managed account framework is going to be a crucial part of enhancing client advice services.”

As an example, Munro noted that the technology embedded in the Milliman and Praemium entries, or the use of institutional data and tools among many of the asset class manager entries, showed that these portfolios offer a degree of sophistication in their management which individual advisers cannot easily achieve.

In terms of the judging criteria for these awards, the portfolio needed to be offered through a managed account structure with the following features:

* Recognised legal structure – registered MIS, MDA, IDPS-like, IDPS model, IMA and SMA.

* Investments directly held by or on behalf of each investor, i.e. not a pooled structure.

• Model based.
• Clear discretion held by the portfolio or investment manager.

Importantly, the portfolio also needed to have a clear objective and a benchmark.

For the Asset Class portfolios, the judges took into account:

* Performance over time periods of one and three years;

* Risk measures, including standard deviation and Sharpe ratio;

* Weighted average cost of investment, both directly and considering the underlying investments; and

• Qualitative criteria, including the resources available to the portfolio management organisation and the structure.

For the Multi Asset Class category, only balanced portfolios were judged.

For the Licensee Managed Account category, the criteria for Asset Class portfolios also applied, with the judges also considering:

* The investment committee structure and resourcing;

* The way in which the portfolios reflected the advice firm’s investment philosophy and appeared to be integrated with it;

* How the managed account service fitted with the client proposition; and

• Supporting materials, in particular, the client and adviser communications about portfolio management and portfolio changes.

Both the Asset Class and Licensee Managed Account awards required a combination of quantitative analysis and qualitative judgement. FE FundInfo partnered with IMAP to undertake the quantitative analysis.

The Innovation Award category recognised those activities that had been designed to improve the:

* Operation and process of managed accounts;

* Adoption by advisers and licensees;

* Investment options;

* Technology used to support managed accounts; and

• Other functions the judges thought were worthy of recognition.

This year’s judges all have a deep understanding of the portfolio construction and investment selection process, through their experience on investment committees, in running managed accounts and fund portfolios, and through their hands on involvement in the development of managed account portfolios.

The judging panel for the awards included:

Amanda Munro CFA - Chair of IMAP Portfolio Management Group.

Brad Matthews - Founding Director at Brad Matthews Investment Strategies.

Dominic McCormick - Consultant.

Dragon Timotijevic - Investment consultant.

Nigel Douglas - Chief Executive Officer at Douglas Funds Consulting.

Toby Potter - IMAP Chair

For more on the 2020 IMAP Managed Account Awards, click here.