ASIC has announced the review in light of the growth in the sector and to make it clear it that the investment program that forms part of the MDA contract contains an investment strategy.

Chief Executive Officer and Director, Harley Dalton, said the move would help ensure the sector remains well-regulated and would give investors surety when selecting an MDA provider.

“As an operator of MDAs for more than 10 years, we have a very deep understanding of the issues and potential pitfalls of this type of investing.  We believe that the review by ASIC will help create transparency for investors and ensure that all MDA providers are subject to the appropriate level of regulation, which will help build confidence in our markets.”

Mr Dalton said that investors had responded positively to Dalton Nicol Reid’s MDA offerings and that it remained committed to delivering strong performance to its investors.

“Our investment portfolios are frequently ranked among the top performers in their asset classes.  In the past two years, we have been increasingly focused on the adviser and institutional markets.  We are now included on most SMA platforms and we have received positive ratings from a number of research houses.

“We are very proud of this performance and look forward to further strengthening our relationships with the adviser and institutional markets.”

The Dalton Nicol Reid Australian Equity High Conviction portfolio was recently received a new rating from Lonsec, the first time the research house has rated the group.

Lonsec said Dalton Nicol Reid “offers a robust and highly repeatable investment process that has been a proven outperformer across the investment cycle. Moreover, Lonsec notes the team is highly aligned with the long term success of the Model Portfolio, with the majority of investment staff owning significant equity in the business.”

The Report also stated that Dalton Nicol Reid has a well-evolved awareness of the specific risks of running an SMA model portfolio. “To date, Lonsec believes the Manager has implemented best-practice processes and controls to mitigate these risks, albeit in a rapidly-moving area.”

Lonsec has initiated coverage of the Model Portfolio with an “Investment Grade” rating and will be looking to build growing conviction in the Manager when the Model Portfolio is reviewed “in-cycle” in the third quarter of 2013.

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“There is only a brief consultation period, so it’s important that the response is coordinated. Not all participants will have common views but where there is a diversity of views, these need to be represented.
 
“Many managed account providers are smaller organisations and responding to ASIC Consultation Papers may not be high on their agenda. Ensuring their views are presented to the regulator is an important part of the role of an industry organisation,” said Toby Potter, Chairman of IMAP.
 
“We are also providing a facility for companies that want to make a specific response to piggy back on the broader response process,” said Mr Potter.
 
ASIC released the CP on 8 March has announced that the response period only extends to 19 April.

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