Managed accounts are on track to exceed $400 billion by the end of the decade, with technology and tighter regulation pushing the sector towards stronger, more transparent growth, Andrew Yap, Head of Portfolio Solutions at Zenith says.
“Managed accounts are growing rapidly and becoming a more significant part of the Australian market,” Yap says.
“The most recent figures available suggest around $300 billion in assets sits within this segment, with expectations it will grow north of $400–$450 billion by 2030. That’s a very strong growth trajectory for the sector.”
Yap says technology has made the market more scalable by strengthening risk management practices, particularly with respect to monitoring portfolio exposures, factor and liquidity analysis. Together with deepened asset allocation expertise, the two factors have been vital to the sector’s expansion in a volatile global environment.
“Over the past five years in particular, technology has transformed how managed accounts are constructed. Early models relied on simple spreadsheets that were focused on high level outputs, compared to today where we use institutional-grade systems for cash-flow modelling, stress testing and scenario analysis,” Yap says.
“You can’t assess a portfolio's durability and probability of achieving targeted objectives without an informed understanding of liquidity, factor exposures and key risks through sophisticated systems. You need to drill into the underlying holdings and understand how a portfolio would behave under stress.
“Our approach is to synthesise what’s happening in the broader market, understand what that means for asset allocation, and identify opportunities that represent our best views and the goals of our clients.
“Technology plays a key role in supporting this process, but importantly, it doesn’t replace it.”
While the sector’s rapid growth has created opportunities, it has also attracted a significant number of new entrants to the market, which Yap says investors need to be sensitive to. At the same time, developments such as ASIC’s focus on fee and performance outcomes and platform oversight have sharpened standards across the sector, which Yap welcomes.
“If managed accounts are a path that someone wants to pursue, they need to be cautious about who they partner with. With that in mind, the onus is on us as providers to help our clients understand what’s happening in the market and why they should feel confident in our approach,” Yap says.
“The regulator’s focus on fund performance, governance and conflicts of interest will hopefully lift standards across the board, which is ultimately positive for investors.”
Yap says increased scrutiny in the sector over the years ahead will separate long-term providers from the more opportunistic players, and identify those positioned to best deliver for Australian investors.
“Longevity matters in this market. Strong governance frameworks and investment infrastructure take years to build,” Yap says.
“Managed accounts are in our DNA. We’ve been operating in this space for more than 10 years, making us one of the first movers in the sector, and we’ve built a very strong platform and framework to support our clients.”
