Through initiating coverage of the separately managed account (SMA) portfolios with these positive ratings, Lonsec is indicating its “strong conviction the products can generate risk-adjusted returns in-line with relevant objectives”.

Head of MPPM, Trevor Fisher, said the ratings reflect the experience, capabilities and robust investment process MPPM has built since it began offering managed accounts in 1999.

“During the past few years, we have seen a marked increase in interest from dealer groups and financial advisers as they recognise how managed accounts can deliver direct equities in a risk-managed and scaleable fashion,” Mr Fisher said.

“Managed account products can provide investors with a sense of control over their financial outcomes and offer transparency over their investments, performance and fee models.

“In step with the increased interest in managed accounts is the rising desire from investors for actively managed portfolios that generate consistent risk-adjusted performance.”

For example, the MPPM Growth portfolio outperformed the benchmark S&P/ASX200 accumulation index by 5.7% per annum, over the five years to June 2013, ahead of its expected 3% per annum outperformance target. In addition to the strong returns, Lonsec noted “its standard deviation was in-line with, or lower than, the benchmark’s over these periods. Further information and performance data on all three MPPM models, is contained within the Lonsec product reviews.

In its report, Lonsec said it has initiated coverage of these model portfolios with ‘Recommended^SMA’ ratings as it believes the highly experienced manager offers a very disciplined and tax-aware approach to Australian equities investment.

It noted that, “Pleasingly, the manager displays many of the attributes Lonsec looks for in boutique managers, including a performance-driven culture and a good alignment of interests between staff, investors and the firm.

“Lonsec believes this approach [manager’s stock research process] provides a disciplined and highly repeatable process which allows the manager to efficiently score companies based on various metrics.

“The manager has a good appreciation of the specific risks of running an SMA model portfolio. By offering an in-house solution, the manager reduces some of the risks faced by competitors who must communicate portfolio changes to third party SMA platforms.”

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