Leveraging an existing partnership between OneVue and managed account manager Watershed Funds Management, Kuda Wealth has been able to create a quality scalable client solution whilst delivering greater efficiencies in the back office.

Kuda Wealth principal Michael Davie had previously established a tailored advice service using direct equities. “Although our clients liked the personal experience and the transparency of investing directly into quality growth companies, the downside of managing disparate shares was significant. The solution was not scalable, extremely labour intensive and offering a direct equity model meant that each client’s portfolio would be rebalanced at differing times depending on the review timeframe, creating differential portfolios and performance for clients. It was a nightmare for our back office.”

After undertaking a review of his business model Mr Davie selected Melbourne-based Watershed Funds Management, a specialist managed account provider, to design and build a series of risk-based portfolios for his clients. “The Watershed Funds Management solution enables us to transition clients into six portfolios without losing the features clients liked about our investment proposition such as being able to look through to the underlying shares in the portfolio,” he said.

That transparency still gives my clients that feeling of control however my time has been freed to concentrate on interacting with clients and finding better ways to add value.
“Watershed’s investment philosophy also aligns to ours,” said Mr Davie. “Like us, Watershed believes in buying and holding quality growth stocks for the long term, with low turnover and strong diversification.”

Watershed Funds Management Managing Director Adam Rowley said: “Our specialist managed account solution favours both Australian and international equities. This enabled us to work closely with Kuda Wealth to develop a series of portfolios customised to meet the needs of Michael’s diverse high net worth client base.”

“We found OneVue’s functionality to be more advanced than other platforms, catering for clients investing in both custodially held and non-custodially held assets. We were impressed with the flexibility of OneVue’s technology. Features such as the ability to get a client’s total wealth view across a number of tax entities such as SMSFs, family trusts or business structures made it an easy sell to clients. Moving from managing direct shares and all the paperwork that comes with that to a professionally managed portfolio on platform eliminates much of the paperwork and certainly makes reporting across portfolios and tax positions much easier,” Mr Davie stated.

In this year’s Investment Trends Platform Benchmarking and Competitive Analysis Report, OneVue was the winner of the product offering category and awarded a top three platform position in Australia, overtaking many of the high profile platforms once dominating the sector. This depth and breadth of product offering resonates well with the diversity expected from high-net worth clients. The partnership between Kuda Wealth, Watershed Funds Management and OneVue demonstrates how a partnership can transform an advice business and the way advisers work with clients.

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Managed as an SMA on the OneVue platform, the medium to long term objective (three to five years) is to outperform the Index by 2-3% each year and the portfolio is well ahead of this performance target with performance since inception currently sitting at 36.98%.

Headquartered in Melbourne, Watershed is an independent boutique Australian owned investment manager that utilises an MDA service to deliver client-focused investment solutions to intermediaries, financial planners, accountants and high net worth investors.

In addition, Watershed Dealer Services provides alternative licensing solutions and support services for both advisers and accountants seeking a true IFA solution.

Watershed started its suite of SMA products with a Core Aus Share and Income portfolio which the group felt was appropriate as world markets gradually recovered from the GFC. Given the global market sell off and blow out in global credit spreads, Watershed forecast strong returns from these sectors in what was still a relatively risk adverse environment.

“Our Emerging Leaders SMA was introduced two years ago as value and increasing investor confidence/interest in the sector began to emerge and the decision has been validated by the SMA returning 36.98% since inception”, said Watershed Director Adam Rowley.

“This has drastically outperformed its benchmark the ASX Small Ordinaries Accumulation Index that has returned -2.77% in the same time period”.

Commenting further on the results, Rowley said the investment team that comprises Ben Bowen, Adrian Rowley and David Arter took an objective approach in some of the best performing stocks in the space as well as isolating the right sectors by going long asset managers and aged care providers – and avoiding resources and mining services.

With an investment team with depth and breadth of experience to deliver market leading performance, the past twelve months has seen all equity SMA’s outperform their respective benchmarks, including their direct US International SMA run by Fred Strauss.

Watershed’s marketplace reputation and profile has been built on a collaborative client service offering, regular sharing of insights and the rationale behind investment decisions, market views and portfolio strategy communication, on the back of solid performance. Financial Planners view Watershed as the Investment Arm of their business. The MDA service offered is an extension of their business and offering to their clients.

Rowley concluded, “Watershed provides a number of bespoke IMA offerings incorporating the use of an MDA license to deliver a truly unique solution.  Innovative and market focussed, the utilisation of technology coupled with our MDA licensing capabilities allows us to implement these strategies efficiently and effectively”.

“We are confident that Watershed will continue to attract growing interest from advisers seeking access to SMA’s, MDA & Managed Account solutions as well as advisers / accountants  looking for an independent non aligned licensee alternative in the post FoFA era”.

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