Investor demand for customisation is pushing an evolution in investment structures

The idea and desire to personalise is something that has infiltrated almost every aspect of our lives. The car with the custom colours and cream leather? Check. The monogrammed handbag? Check. The targeted advertising in your social media based on your demographics and google searches? Creepier… but check.

It stands to reason that we have come to expect that our investments too should be personalised to not only our needs but our social views and beliefs. While you can do it yourself by researching and investing in individual shares and assets, most people need something that can be managed on their behalf without the excruciating admin. That’s where separately managed accounts (SMAs) can come in.

“Customisation in SMAs is really only limited by one’s imagination – from asset class selection to structuring direct shares portfolios,” says Anthony Golowenko, Portfolio Manager for MLC multi-manager funds.

“Investors today want flexibility, transparency, and control, and SMAs offer all of that in a contemporary, on-platform solution.”

Golowenko notes that he sees a vast expanse of options in how customers use SMAs, with many treating their SMA as a core part of their portfolio, while incorporating existing assets outside of the core. MLC has broadened its model portfolio options to allow investors a bigger range of choices, with five premium models and five value models – all options are active, but Golowenko explains that the value option makes use of some index components to reduce costs to investors.

In this episode of The Pitch, Golowenko discusses the evolution of SMAs, the model portfolios MLC offers and customising your portfolio beyond the model to a range of assets, such as illiquid assets.

Edited transcript:

With the increasing popularity of customisation, what trends have you observed in managed accounts?

The inherent flexibility of the structure is key. We offer transparency and a wide range of investment solutions across asset classes, sub-asset classes, and even direct shares. The degree of customisation is limited only by one’s imagination. 

At MLC Asset Management, we partner with high-calibre managers worldwide, bringing their strategies to Australia as on-platform solutions. Customisation can mean different things - whether it’s branding reports with an advisor’s logo or structuring a direct shares portfolio differently. The flexibility and transparency of this approach naturally support customisation.

How has customisation evolved since you first started offering these products?

Initially, individually managed accounts were mainly for high-net-worth investors and often included unlisted assets. Today, SMAs serve a much broader range of investors. Our program offers allocations from 30% growth assets for conservative investors up to 98% for high-growth strategies. 

The core SMA structure can serve as a foundational investment, while additional assets - such as unlisted investments or inherited direct shares - can complement it. The evolution of platform technology has significantly enhanced customisation capabilities, and we’re still just getting started.

What has surprised you about SMAs and how investors use them?

One of the biggest surprises is the need to clarify what an SMA actually is. Even within our business, we frequently discuss how it differs from managed funds or multi-asset products. In reality, it’s not that different; it’s the same investment team, governance structure, and processes, but in a contemporary, flexible, on-platform solution. 

We’ve also learned that investors and advisers value clear communication. They want to understand the benefits, not just the features. This has led us to refine how we engage with advisers and clients, ensuring transparency in portfolio decisions and strategy implementation.

How have these trends influenced your approach to offering SMAs?

When we launched nearly five years ago, we focused primarily on moderate, balanced, and growth allocations. We quickly realised that a full-practice solution needed both conservative and high-growth options. We’ve since expanded our offerings, including a premium fully active suite and a value series with selective index components. As we scale, we continue reinvesting in our program, bringing more active components at competitive price points while enhancing our strategies.

How do you incorporate less liquid assets, such as private equity, into your portfolio?

By nature, SMAs must accommodate daily transactions such as investments, redemptions, and pension payments. Less liquid assets can be included, but we must be strategic about it. At MLC, we selectively integrate credit, unlisted loans, and insurance-related investments. Private equity can play a role in enhancing diversification and resilience, but strictly illiquid assets cannot be directly included in an on-platform SMA. However, we can capture exposure through real return strategies, inflation-plus investments, and derivatives.

How did you develop your current model portfolios, and how many options do you offer?

MLC has been constructing multi-asset, multi-manager portfolios for nearly 40 years. Our Horizon series and multi-active strategies serve as the foundation for our managed accounts. We apply the same investment expertise, governance, and processes while enhancing communication and transparency. Our team spans investment management, operations, performance analytics, and client engagement. This collaborative approach has earned strong industry recognition, including high ratings from SQM.

We offer 10 model portfolios - five fully active premium models and five value series models that blend active management with index components. These options have been well-received across various platform providers and continue to grow.

What distinguishes your core options from your value options?

The main difference is cost. The value series achieves a lower fee structure by indexing certain Australian and global share components while maintaining active management in other areas like listed real assets, alternatives, fixed income, emerging markets, and Australian small caps. This approach provides advisors and clients with choice, aligning investments with their preferences in a flexible structure.

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For more information on the MLC Managed Account Strategies, please visit here. If you are a financial adviser, please contact your MLC representative here. If you are a direct investor, please speak to your financial adviser.