Alex Vynokur

In a significant development for Australia’s financial advice landscape, Betashares has announced that it will merge its managed accounts division with InvestSense, forming a new business called Trellia Wealth Partners.

Upon completion of the merger, Trellia Wealth Partners will offer one of the most comprehensive managed account solutions in the Australian market, encompassing actively managed and index-based portfolios, as well as fully bespoke investment portfolio design and implementation support.

With approx. $8 billion in funds under management and a strong growth trajectory, Trellia Wealth Partners will operate as a standalone business, backed by the strength and scale of the Betashares Financial Group.

A stronger, more comprehensive partner for advisers

Trellia Wealth Partners brings a powerful and diverse set of capabilities designed to support and empower advisers to deliver lasting value for their clients.

Trellia Wealth Partners will deliver a leading range of investment solutions across Betashares’ low cost, index-based model portfolios, InvestSense’s actively managed flagship portfolios, as well as fully bespoke portfolio solutions.

Trellia Wealth Partners will provide comprehensive business support services to enable advice firms to accelerate their growth strategies.

Going beyond traditional practice management, Trellia Wealth Partners will also provide technology and tools to enhance business efficiency and empower advice firms to deliver a greater client experience. In addition, clients will have access to business strategy consulting, organic growth and acquisition support, as well as best in class portfolio insights, reporting, client engagement content and commentary, which financial advisers can leverage to deliver better outcomes for their clients.

InvestSense Directors Jonathan Tolub, Jonathan Ramsay, Fil Andronaco and Paul Carrington will serve as Partners and have all made a long-term commitment to the business.

Backed by aligned philosophies and a shared purpose

The partnership underlying Trellia Wealth Partners is founded on a shared vision of the key trends reshaping the financial services industry and an unwavering conviction in the positive outlook for Australia’s financial adviser community.

Many of these powerful trends are not just confined to Australia but are playing out globally. These themes include the structural demand for financial advice, the power of managed accounts for both advisers and their clients, the rise of ETFs, the significant growth of private market opportunities, as well as the shift from accumulation to pension phase for the superannuation sector.

Betashares Founder and Chief Executive Officer, Mr Alex Vynokur, said the backdrop for Australia’s financial advice community is very conducive to growth over the coming years, as more people seek advice to make better financial decisions.

“In this climate, Trellia Wealth Partners represents a purpose-built offering that enables financial advisers to leverage innovation, scale, and international best practice to deliver more value to their clients, and assist their practices to grow into the future. We will build on the pedigree, experience and track record in service of Australia’s financial advisers and their clients,” Mr Vynokur said.

Continuity and additional capability

Trellia Wealth Partners will maintain full investment independence, continuing to apply the proven investment philosophies and processes that clients are accustomed to. To that end, there will be no change to the management or service of existing client portfolios unless enhancements with demonstrable adviser or investor benefits are available or appropriate.

“We are building on the strong foundation we have laid over the past decade,” said Jonathan Tolub, incoming Partner at Trellia Wealth Partners.

“Our flagship and custom-built portfolio solutions have helped advice practices grow for over a decade. Now, we are combining that agility with the scale, support, and world class infrastructure needed to deliver even more value to our clients,” Mr Tolub said.

“From the beginning, it was clear that this partnership was more than complementary – it was aligned in purpose. We bring different strengths, but we share a belief in building client-centric, advice-aligned solutions,” Mr Tolub continued.

“Trellia Wealth Partners allows us to provide advisers the advantage of leading investment solutions, best in class support capabilities and depth in expertise, to assist our clients in their growth journeys,” Mr Tolub concluded.

Trellia Wealth Partners will bring the client, operations and advice solutions teams together for a seamless client experience, whilst the investment teams will retain their independence, integrity and continuity for clients.

A growing market and a growing need for scale and service

Managed accounts are currently one of the fastest-growing areas in Australian financial services. According to the Institute of Managed Account Professionals (IMAP), the sector reached $232.77 billion in assets as of 31 December 2024 – a nearly 50% increase from the previous year.

Trellia Wealth Partners expects the strong rate of growth in the managed accounts industry to continue over the next decade and beyond.

A reflection of Betashares’ commitment to serve the needs of Australian financial advisers

The launch of Trellia Wealth Partners reflects Betashares’ ongoing commitment to supporting the financial advice profession with innovative, cost-effective, market leading solutions.

Betashares recently reached $50 billion in assets following a period of strong organic growth. It also follows last year’s strategic investment from Temasek, a global investment company headquartered in Singapore, which is aligned with Betashares’ long-term strategy of continuing to build a diversified financial services business, with a strong focus on delivering transparent, cost-effective investment products, portfolio solutions, services, technologies and financial education.

Betashares’ Mr Alex Vynokur continued by saying that joining forces with InvestSense to transform the managed accounts landscape will help accelerate work toward the broader goal of helping Australians build long term wealth.

“For nearly 15 years, we have partnered with Australia’s financial advisers through the provision of a range of high-quality products and services, including ETFs, managed accounts and additional services such as business support. We consistently strive to be a trusted partner for Australian financial advisers, aiming to deliver not only investment excellence but also support to our clients in growing their businesses, achieve business efficiencies and deliver exceptional outcomes for their clients.   Today’s announcement is a reflection of our commitment toward this goal.

“Financial advisers play an integral role in helping many Australians progress toward their financial goals. Trellia Wealth Partners brings together our unique strengths and a shared purpose – to support advisers through innovation, partnership, and best-in-class investment thinking. This is not just about combining capability, it’s about accelerating our impact,” Mr Vynokur concluded.

The transaction facilitating creation of Trellia Wealth Partners is expected to complete in Q3 2025.

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Fil Andronaco

Jonathan Ramsay, Jonathan Tolub and Fil Andronaco have announced that their new business InvestSense has commenced business from premises located in the Sydney CBD.

Commenting on the aspirations of the newest entry into the Australian financial services marketplace, spokesperson Jonathan Ramsay said the cornerstone of the business is to assist advisers to help their clients better understand their investment situation.

“Unfortunately, the financial services industry often has a tendency to either blind its constituency with science or oversimplify with unrealistic promises, and sometimes does both at the same time.  We want to strike a balance  – as Einstein reputedly said ‘to make things as simple as possible but no simpler’.  To do this we have a valuation driven approach that integrates everything from asset allocation to manager selection and which is relatively easy to communicate to the end client”.

“It is also clear that the industry has picked up a fair amount of clutter over the years and that the perceived ‘best practice’ in portfolio construction, compliance and advice doesn’t always make things easy for advisers or their clients. We think there is a lot you can do to remedy that situation with the technology that is now widely available and a clean sheet of paper”.

To those ends the InvestSense team will work diligently to make life easier for advisers and their clients by combining contemporary platform technology with a coherent investment process and approach to communication.

Jonathan Ramsay continued, “We can assist dealer groups and their advisers to re-engineer their advice processes and investment offerings in a way that better suits consumer needs”.

InvestSense also believes it can improve investment outcomes with a relatively simple process that has stood the test of time and allows clients to –

• Provide an informed view of prospective returns from different asset classes, funds and securities

• Increase transparency using managed accounts that help investors to help themselves

• Implement models in a way that facilitates a more agile investment process

• Communicate portfolio positioning better

• Ultimately help their clients make better long term decisions based on a common understanding of their needs and portfolio objectives

Jonathan Ramsay concluded, “We are excited about the future and prospects for success and are very confident that the InvestSense business model and marketplace offering will resonate and be very attractive to dealer groups and advisers servicing the needs of high net worth individuals”.

“We are talking to a number of dealer groups and I expect to announce our first major dealer group client signing in the coming weeks”.

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X-Rays reveal the cracks in model portfolios

van Eyk’s new initiative for financial advisers, Portfolio X-Rays, is revealing that many model portfolios are not set up to meet their performance objectives and are vulnerable to shocks and hidden risks.

Portfolio X-Rays are a consulting service introduced by van Eyk in October 2012. The service, designed specifically for advisers, forensically examines a model portfolio to see whether the investment outlook, risk tolerance and the model’s objectives are accurately reflected in how it is constructed.

The service dissects the portfolio by categories including asset class, investment style and fund manager selection to determine whether the design of the portfolio and the choice of assets is in tune with the adviser’s broader strategy for the retail investor and whether it is particularly vulnerable to certain threats.

It also uses current valuations and other proprietary information to determine the probability that a portfolio will meet its return objectives.

van Eyk Head of Asset Consulting Jonathan Ramsay said the X-Rays completed so far showed some of the issues were surprisingly common across portfolios. 

“The results show that most portfolios require at least some adjustments and that it’s possible to reduce the level of risk without giving up performance or radically changing asset allocation,” Mr Ramsay said.

Some of the most common problems with model portfolios were:

• Many were overly vulnerable to profound or sudden markets shifts, such as an end to the rally in bond markets or a breakout in inflation.
• Combining too many active fund managers in a portfolio or doing so without due care can result in expensive, index-like returns.
• Some portfolios had an unintended bias to particular market sectors or a certain investment style.

“There was also a significant issue with alternative investments,” Mr Ramsay said.

“Although we are firm believers in using alternatives to reduce volatility and manage risks, some assets considered to be in the alternatives sector don’t offer the diversification and low correlation to traditional assets that investors want.”

Mr Ramsay said strong risk management was always desirable in investing, but especially now because of the large economic and financial imbalances left in the wake of the GFC.

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Mr Ramsay warned that, while he supported the concept of a standard measure of risk, the current version was already producing anomalies because it allowed funds wide discretion in what methodology they used to calculate it. 

The SRM was adopted for all new super fund product disclosure statements issued after June 2012. It requires super funds to state the likely number of negative annual returns a fund will experience in 20 years.

“We have already found examples where equities funds have been given similar risk measures to bond funds, despite the vastly different risk profile of these asset classes, simply because different funds are using different methodologies to calculate the SRM,” Mr Ramsay said. 

In another example, fund provider A gave an SRM for its bond fund of 3-4, while fund provider B gave its bond fund an SRM of 1-2, despite both funds having similar benchmarks and performance objectives. 

“Any rational consumer looking at the SRM would choose the product being promoted by Fund B, even though they are both very similar funds,” Mr Ramsay said. “The only difference is the way the SRM has been calculated.”

The SRM allows funds to deviate from a standard methodology as long as they explain and justify their reasons for doing so. 

But Mr Ramsay warned this could defeat the very purpose of a Standard Risk Measure. 

“It introduces complexity that has the potential to confuse many retails investors, if indeed they bother to go beyond the headline SRM when reading the PDS,” he said. 

Mr Ramsay said if consumers could be trusted to interpret detailed and often complicated nutritional information on food packaging there was no reason they could not benefit from a slightly more detailed standard measurement of investment risk. 

He proposed a new SRM that not only took into account the risk of negative returns but also showed how far the value of an investment was likely to fall during a drawdown and how many years it was expected to take to recover. This would be of particular value to those investors nearing retirement. 

Funds should also be required to publish historical figures for these measurements where available, as well as their own estimates, so they could be judged on those estimates. 

“While this may seem like a lot of information to some, it’s less than you would find on the back of a packet of chips,” Mr Ramsay said.

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van Eyk Head of Asset Consulting Jonathan Ramsay said an analysis of top performing managers showed that fund outperformance very rarely lasted for more than a few years before it petered out, or worse, took some or all of that outperformance back by underperforming the market index. 

Since the flow of funds from investors into an outperforming manager typically grew exponentially as its level of outperformance increased, most money would flow into the fund as its performance was peaking. 

“By weight of money many investors in these funds will end up being disappointed”, Mr Ramsay said. 

The analysis was based on a list of core, style neutral Australian equity funds which had outperformed the Australian equity market by five per cent per annum at some point over the last 20 years. This was the “crème de la crème” of Australian equity funds, Mr Ramsay noted. In fact, only ten funds met that performance standard. 

The performance of these funds showed that even though their outperformance could go on for a number of years, they all either went on to have long periods of underperformance, or at best, performed in line with the market. 

Mr Ramsay said the problem with previous studies on persistency in fund performance was that they used average measures of performance or the results were highly dependent on the time horizon chosen. “We took a closer look at whether any individual managers had actually provided persistently strong outperformance or whether they had just managed to catch a market wave, a wave which inevitably subsides,” he said.

Mr Ramsay said the only way investors could reliably take advantage of a strongly performing fund was to try to predict periods of outperformance and invest before it occurred rather than chasing the chimera of past performance. 

He said fund outperformance tended to be episodic and investors needed to take into account more than how good a manager and their investment process was. “Stock-selection doesn’t happen in a vacuum and having a view about the market and the interaction between that and a manager’s investment process is very important,” Mr Ramsay said. 

He said the notable achievement of the best and most enduring funds management organisations was avoiding underperformance when markets were subdued while being able to catch the next market wave when it came along.

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In this month’s issue:

• CEO Mark Thomas looks at the new rules for portfolio diversification in the post-GFC era.
• Head of Asset Consulting Jonathan Ramsay shows how focusing too much on past performance statistics can lose investors money.
• Head of Research John O’Brien tunes into the troubling rhythms building for Australia’s banking sector.
• Head of Ratings Matt Olsen ponders whether defensive stocks are as expensive as fund managers are saying.

All this content and more is available now in the iTunes App Store as a free download.

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