Victor Huang

In the 6 months to 30 June 2025 balance date, Funds Under Management (FUM) in Managed Accounts increased  to $256.24 bn, with reported net inflows of $16.79 bn

This is a $50.66 bn or 24.6% annual increase on 30 June 2024 figure of $205.58 bn

Toby Potter – Chair of IMAP said, “The net inflows in the 6 months to 30 June 2025 were slightly higher this period, which is a strong signal that advisers are finding more clients, whose investment goals and service needs suit the appropriate use of managed accounts.

The managed account market is now in the maturity phase, ”

“Strong investment market despite the challenges of geopolitical concerns has been a feature of 2025 to date, and it is encouraging to see ‘well advised’ clients adhering to their planned strategies.” says Potter

“Looking at the types of managed accounts, SMA’s market share increased slightly with 66%, managed discretionary accounts (MDAs) steady at 23.5% of managed account FUM. The industry leader board is unchanged with 8 organisations managing $10+ bn FUM,.“

Victor Huang, Milliman’s Practice Leader, Australia advised that “The investment markets continued to show strong growth in the first half of calendar 2025 with a 6.4% increase in the value of the ASX / S&P 200 Accumulation Index, giving an increased annual growth rate of 13.3% for the year June 2024 to June 2025.

This first half of 2025 saw markets perform well, despite volatility introduced by the tariff trade wars related to USA, and continued conflicts in Ukraine, and the Middle East. Positives have been the invigoration of Europe, UK, Australasian, and Canada trade links, stronger commodities and AI technology growth being key themes.”

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Victor Huang

Milliman’s SmartShield managed accounts, which offer dynamic protection against market downturns, have passed $100 million in funds under management.

This milestone shows growing demand among advisers and clients for a low-cost solution to protect portfolios against market crashes and volatility without giving up the potential upside.

Milliman Principal and Head of Investment Solutions Asia-Pacific, Victor Huang, said the SmartShield managed accounts were successfully launched to the retail market just as the COVID-19 market downturn hit in early-2020.

“The COVID-19 downturn offered up a real-world situation to test the strategy. It demonstrated to investors how effective dynamically hedging their portfolios against significant market downturns can be. Global insurers, pension funds and wealth management firms have successfully used these techniques for decades. Through SmartShield, retail investors have been able to protect their portfolios in the same simple and low-cost way.”

Milliman’s Financial Risk Management (FRM) practice is a global leader in managing financial risk, providing investment advisory, hedging and consulting services on approximately $A246 billion in global assets. Milliman FRM has a well-established track record of over two decades, navigating the past three market crises. It employs more than 200 professionals across four offices globally, helping protect the portfolios of insurers, pension funds, and wealth management firms around the world.

The four SmartShield portfolios (Moderate, Balanced, Growth and High Growth) have been designed to provide a cushion against downturns and volatility (rather than a hard guarantee). The dynamic risk management strategy is implemented using futures contracts to ensure it is low cost and liquid, while providing investors with strong participation in bull markets.

Contrarian Group Financial Planning Certified Financial Planner, Damian Liddell, says the SmartShield strategy suits his retiree clients, particularly given this year’s challenging market conditions.

“The market is really choppy at the moment – we’re long overdue for a pullback,” he says. “Property and share markets have been propped up by falling interest rates for a long time. Now that rates are rising, it’s really difficult, and that’s where the SmartShield approach is good – it lets people have their cake and eat it too.”

A growing proportion of the population are approaching retirement or already drawing down capital, where they face sequencing risk, which describes the bigger impact a market downturn can have when struck in early retirement, compared to being in the accumulation phase.

Liddell’s other clients also face similar market timing risks when they invest large sums of money, such as from a property sale or inheritance.

“My clients are prepared to accept some risk – they know SmartShield is not full protection – but one that strikes the right balance at low-cost. They don’t want the risk of a sharp downturn hitting a traditional balanced portfolio and are prepared to give up some upside if they can generate reasonable returns over the long-term.”

Since inception, Milliman SmartShield High Growth portfolio added 1.22% p.a. above its benchmark (see footnote), whilst reducing volatility from 15.13% to 9.47%.

The built-in risk management within SmartShield gives advisers the confidence to increase their exposure to growth assets, knowing that the protection will kick in when needed. This potential for extra growth is important to increase the chance of delivering positive real returns in this high inflationary environment.

A growing number of investors are also now starting to consider term deposits or online savings accounts, which are becoming more attractive as interest rates rise, according to Liddell.

“For the last 5-7 years I’ve probably been too conservative,” Liddell says. “If it wasn’t for SmartShield I’d probably still have 40-50% exposure to growth assets, but with SmartShield you can just bump it up that extra 10-20% rather than going to fixed interest or even term deposits.”

Market conditions remain uncertain as central banks around the world continue to raise rates to fight surging inflation. Inflation is expected to nudge almost 8 per cent in Australia by the end of the year, while other factors, such as geo-political turmoil, are adding to volatility.

However, investors should continue to focus on their long-term goals, according to Huang.

“Dollar-cost averaging remains a popular strategy among advisers investing large sums on behalf of clients. The Milliman SmartShield managed accounts now provide another way to manage uncertainty given it provides strong protection against extended market downturns while also allowing investors to participate in bull markets.”

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[1] Performances are calculated net of underlying investment cost and management fee. Fees applied on the benchmark = 90bps, it represents the average management fee charged by investible multi-asset diversified portfolios as published by Morningstar research. Past performance is not indicative of future performance.
[2] Aside from hedging strategy performance, short term performance relative to the benchmark differs due to imperfect performance tracking of the underlying sector ETFs against its benchmark on a month to month basis. This is mainly caused by difference in the period that performance is accounted for between various time zones, as well as difference in effective date of dividend distributions relative to the benchmark.
[3] Inception Date: 3rd Mar 2020

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In HUB24’s latest Platform Series ‘Measuring the Cost of Delay’, it outlines a scenario where a client who invested $500,000 in a diversified growth managed portfolio over a period of six months was $4,460 better off when portfolio manager decisions were implemented immediately compared to if they were invested outside of the managed portfolio structure where there was a delay in implementation of even one week.^[1]

Over time, the benefits of timely implementation were reduced further, and by week six, $6,380 or 60.1% of the gain was lost through implementation delay.

Increased compliance and the manual nature of traditional portfolio management processes has made it challenging for advisers to deliver timely implementation of investment decisions. Advisers can often take one to six weeks to implement the decisions across their client base due to challenges in preparing advice documentation, discussing changes with clients, obtaining client consents and lodging paperwork.

Milliman Principal Victor Huang who provided the analysis for the scenarios commented, “Delaying asset changes by just a couple of weeks can really have a material impact on your client’s outcomes and quite possibly negate a large part of what the portfolio managers are trying to achieve when making these decisions.”

In another scenario, HUB24 illustrated the impact on client portfolio value where portfolios are rebalanced typically twice a year to coincide with biannual client reviews (‘static rebalancing’), with ‘dynamic rebalancing’ where rebalancing is implemented whenever the asset allocation weighting moves 2% outside the initial strategic asset allocation range.

Using a $500,000 investment portfolio with a 70/30 growth-based asset allocation, the scenario illustrated that using dynamic rebalancing, where six rebalances were executed (compared to two under static rebalancing), resulted in a benefit of $3,531 for the client in 2020.^[2]

This result was further increased over five years between 2016 and 2020 where analysis showed the portfolio was enhanced by $8,335 compared to the portfolio that used static rebalancing, representing an additional return of 1.67% on the initial portfolio of $500,000.

According to HUB24’s Head of Managed Portfolios Brett Mennie, advisers are looking for more efficient ways to approach portfolio implementation, to access professional investment expertise at scale and to tailor portfolios to meet individual client needs to add value to clients.

“Although we have seen enhanced market volatility recently and these results won’t always be the case, these scenarios illustrate that empowering portfolio managers with innovative managed portfolio capability to make changes to client accounts in real time may lead to a better outcome for clients compared to simply reviewing the portfolio twice a year, once again highlighting the benefit of managed portfolios over traditional portfolio management processes,” said Mr Mennie.

Townsend Cobain Partner and Private Wealth Adviser Tim Townsend agreed, saying the client consent model has its limitations. “There was a constant feeling of potentially leaving clients behind on the battlefield. We needed a solution to be able to act decisively, quickly and effectively across all of our clients.”

HUB24’s commitment to delivering innovative managed portfolio capability for advisers and their clients has consolidated their position as the market leader, maintaining 1st place for Platform Managed Accounts functionality for the 5th year running.^[3]

Scenario 1 – The cost of delayed asset allocation changes

Using the live portfolio performance of a $500,000 diversified managed portfolio on the HUB24 platform invested for a six month period, HUB24 compared the potential cost of delaying asset changes by 1, 2, 4 or 6 weeks, to illustrate the real world experience of how long it might take an adviser to administer a portfolio change.

This scenario illustrated delays in implementing the asset allocation change reduced the switch advantage – in particular more than 42% of the gain of implementing an asset allocation change was lost through an implementation delay of one week.^[2] This loss was increased by more than 60% through an implementation delay of six weeks.

Scenario two – The cost of delayed portfolio rebalances

Here the cost of delayed portfolio rebalances were analysed by comparing dynamic rebalancing to a static approach to portfolio implementation. Using a $500,000 investment portfolio with a 70/30 growth-based asset allocation, it illustrated the portfolio that used dynamic portfolio changes (rebalancing six times in a year) resulted in a one-year outperformance of $3531 in 2020 compared to the portfolio that did not.

Over three years between 2018 to 2021, the scenario illustrated the portfolio which used the dynamic rebalancing did so 11 times compared to six times under static rebalancing, and lead to a $6,144 investment performance benefit representing an additional total return of 1.23% of the initial portfolio balance.

Over five years, the scenario illustrated that the portfolio which used the dynamic rebalancing resulted in it being enhanced by $8,335 when compared to the portfolio that used static rebalancing, representing an additional return of 1.67% on the initial portfolio of $500,000.

Further to this five year analysis we tested outcomes based on 20 one-year timeframes (2001 to 2020) and observed that the dynamic approach (based on the same parameters) achieved more favourable results 70% of the time (representing 14 of the 20 one-year timeframes).

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[1]Refer to scenario: ‘The Cost of Delayed Asset Allocation Changes’ at page 5, of Platform Alpha Series: Measuring the Cost of Delay (September 2021). The six month period for the scenario was from March to September 2020. The magnitude and direction of these results are specific to the given set of market movements. Other sets of market circumstances and parameters will yield different results.
[2] Refer to scenario: ‘The Cost of Delayed Portfolio Rebalances’ at page 6, of Platform Alpha Series: Measuring the Cost of Delay (September 2021). The magnitude and direction of these results are specific to the given set of market movements. Other sets of market circumstances and parameters will yield different results.
[3] Investment Trends Platform Analysis and Benchmarking Report 2021.

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“We are very pleased to have someone of Durand’s calibre join us to lead the national distribution strategy. Durand brings extensive local retail investment experience with him to Milliman and will play a pivotal role in the expansion of this area of the business” said Principal and Head of Investment Solutions Asia-Pacific, Victor Huang.”

Prior to Covid-19, Financial planners were already facing a raft of challenges in the wake of the Royal Commission, with regulatory requirements such as Best Interest Duty drawing a focus on the fees and benefits of investment solutions for clients. Our SmartShield Managed Accounts have armed advisers with an investment solution for their clients at an important time.

“This new appointment further demonstrates our commitment to providing advisers with simple and affordable solutions that leverage decades of institutional expertise to help Australians achieve their retirement goals.

“The solutions are designed to fit within existing processes and provide a level of certainty that was previously lacking.” said Mr Huang.

Mr Oliver has previously held a number of roles at Netwealth and HUB24 and was most recently State Distribution Manager for independent platform provider and investment administrator, XPLORE Wealth. “I’m delighted to be joining the Milliman team here in Australia in this important role and at such a critical time of growth for the business and the SmartShield Managed Account solutions. I believe that we are well positioned to take advantage of the many opportunities ahead of us and look forward to working closely, with the team,” Mr Oliver said.

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