SQM to lift veil on relative Managed Accounts performance

Australia’s only research and ratings house which does not also manufacture managed account products, SQM Research, has announced it will be collecting, collating and publishing the relative investment performance of the products.

SQM Research founder and chief executive, Louis Christopher said that the move was both in response to requests from industry participants but also in respect of suggestions that the financial service regulators, the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) are becoming concerned about the lack of transparency around managed account performance.

He said SQM will be sending data surveys to managed account managers, starting immediately. The data surveys will in turn be used to collate performance comparison tables and eventually relevant benchmarks for the sector to adopt.

“Returns data within the Australian managed accounts sector is currently difficult to obtain and verify, let alone conduct proper performance comparisons on,” Christopher said. “In my opinion, the lack of data remains one of the weaknesses in this sector which I believe will eventually inhibit sector growth if it were to persist over the medium term.”

“We also understand that industry regulators are growing impatient with the lack of transparent and comparable managed account returns. Hence why we believe it’s important the industry acts now by offering better performance information in this sector.

“Given our position of rating a broad range of multi asset SMA solutions, we have been contacted by key industry participants to kick off this initiative. I think from a ratings perspective as well, it is important SQM receive more frequent performance updates to ensure we meet our own AFSL obligations when monitoring rated managed accounts.

Christopher said he had to admit he was unsure how much real cooperation SQM will receive.

“But I do know the best way to maximise cooperation is to give back to the industry. And that’s why, once we are confident of data accuracy, we will be publishing readily accessible comparison returns in partnership with key industry media outlets and managed accounts associations. If all goes well, we will be publishing the first set of comparable returns prior to the end of 2024,” he said.