Watershed provides a number of bespoke Managed Account offerings incorporating the use of an MDA license to deliver a unique solution. Innovative and market focused, technology allows us to implement strategies en masse, instantaneously.
Our Funds Management Services
Our Funds Management Services
Approved Product List (APL)
Watershed tailors each Client / Advisers’ APL to specifically meet their individual needs. Whether their requirements are; MDA, Derivatives, Gearing, Direct International or even white label solutions, we manage a dynamic APL as ultimately it’s the strategy that’s imperative, not the extent of the quantum of managed funds on the APL. APL’s need to be specific, effective, not expansive.
Managed Discretionary Account (MDA) Services
Watershed is a holder of an exclusive Managed Discretionary Account (MDA) license issued by ASIC. This license is issued to organisations that ASIC deem to have sufficient professional expertise and experience to manage share portfolios on behalf of their clients. The licensing capability enables the MDA Operator to make portfolio amendments for clients, in accordance with their Investment Program (which stipulates their unique investment objectives) when markets and investments dictate – as opposed to the traditional ‘client review & portfolio change’ process that currently dominates the industry. The MDA relieves the client of the day-to-day decision-making and administration of their portfolio, as well as providing more efficient and timely implementation of changes. The inability to enact changes swiftly in a volatile market can prove very costly. There are a host of other benefits of using an MDA; tax effectiveness, avoiding performance leakage, negating the need for ROA’s, the ability to manage a clients entire portfolio – UMA, particularly important when advising in SMSF’s with the use of property and bare trusts as opposed to portions of a clients portfolio, but essentially, done well, IMA portfolios constructed by professional investment managers under the licensing regime of an MDA – should provide considerable outperformance. MDA’s open up the Advice World.
Individually Managed Accounts (IMA)
The concept of a tailored investment portfolio constructed to meet the specific needs of a client, an IMA, is not new. The challenge has always been the ability to manage them en masse. MDA’s are the solution.
At Watershed, our differentiation is not only the MDA or Derivatives capabilities on our license, it’s our approach. With a blank canvas, we sit down with the adviser and construct from the ground up each and every IMA portfolio with them, for them. We then take on the responsibility of actively managing those portfolios in perpetuity, in line with clients Investment Program, collaboratively.
Constant communication a given, formally we sit down with the Adviser on a monthly basis to; run through our views on current global markets, highlighting any opportunities or uncertainties we feel may be present, before running through their clients IMA portfolios to assess how they’re tracking, what changes might be required, exposures introduced / reduced, and so on. As the process in building these IMA portfolios began with a blank canvass, the process for ongoing management, although within a structured framework, is essentially another blank canvass approach due to the flexibility afforded by the MDA. The question, ‘where do we want to be invested’ is a constant, and an exciting journey Watershed embarks on with its clients - Advisers.
Sitting idle is not what an MDA is about.
Separately Managed Accounts (SMA)
An SMA is essentially technology that wraps up a direct share portfolio, much the same concept as a managed fund, yet with substantial benefits to the investor. Wherever possible, Watershed aims to eliminate Fund Manager MER’s by constructing & utilising SMA’s. We devise customised SMA solutions for Advisers that can include anything from; direct international equity, commodity market exposure, corporate debt, structured products and residential property. SMA’s are the latest development in the evolution of funds management. They provide the benefits of professional management but unlike a managed fund, you hold the individual stocks and shares in your own name, rather than holding units/a share in a pooled fund. This provides a more transparent, lower cost and far more tax effective outcome. SMAs offer an ideal alternative to traditional managed equity funds.
Watershed views derivatives as a risk management tool, particularly valuable in the current market environment. A derivative is a financial product whose value derives from the value of an underlying asset, whether this is an individual share or an entire index. These assets can provide significant benefits to a client’s portfolio, enabling them to manage risk, leverage their investment exposures and generate profits irrespective of which way a share or the broader market moves.
Dynamic Tactical Asset Allocation
At Watershed we aim to add long term value to client portfolios through tactical asset allocation. Short term sentiment, particularly in recent years, can often see markets move sharply and trade at a significant premium or discount to fair value. Watershed seeks to take advantage of extreme market volatility for clients. We utilise the flexibility afforded by our MDA service by tactically allocating funds between defensive assets and growth assets, moving funds quickly and efficiently between, Asset Classes, Global Exposures, Separately Managed Accounts (SMAs), and everything in between. We have a thorough understanding of all relevant asset classes that could enhance client returns throughout the investment cycle, from fixed interest through to private equity.
Portfolio Construction & Review
Portfolio construction is a completely collaborative process between Watershed and the client / Adviser. All clients / Advisers have their own views of markets and the world on any given day that all too often compete with the stated objectives they wish their portfolio to achieve. IMA portfolios are constructed to achieve these objectives, within established constraints (the Investment Program), whether they be; acceptable risk bands, timeframes or other, regardless of what the ‘sensational’ daily market view may be at the time. It is the role of the professional Investment Manager to remove emotion and ensure the portfolio stays true to its stated mandate and where necessary, adjust the mandate. Broadly speaking, IMA portfolios are constructed with the following underlying philosophy;
- Macro-Economic approach drives Asset Allocation (we don’t believe in diversity for diversities sake)
- Significant outperformance can be achieved through tactical asset & sector allocation by;
- Avoiding Global Markets, Asset Classes & Sectors with significant economic headwinds or structural issues,
- Exploiting market volatility as risk or risk aversion themes prevail, and
- Building overweight exposures to Global Regions, Asset Classes or sectors likely to deliver earnings growth ahead of the broader market given the current economic environment.
Active Portfolio Management
Continuous active portfolio management under an MDA structure. Arguably the most significant point of difference and benefit is the interconnectedness the MDA brings. With time; Client, Adviser and Portfolio Manager develop an almost symbiotic relationship in that all parties involved understand at any given point in time the direction the IMA portfolio is taking or must take. It’s a fluid relationship with the IMA portfolio evolving over time to stay affront of changing economic and market cycles. It is this symbiotic focus that provides the freedom for the client (and at times the Adviser) to enjoy life, as we, the MDA Operator, manage their IMA portfolio(s) perpetually. By way of example; many of our retired clients travel for extensive periods. In this interconnected world where connectivity brings our social world to us at the touch of our mobile devices, why wouldn’t ones financial affairs follow suit? MDA’s embrace this lifestyle choice.
Collaborative Development of Model Portfolios
Collaborative development of Model Portfolios between Portfolio Managers & Financial Planner. At Watershed we do not simply offer a suite of product but rather work with our clients to deliver solutions tailored to their needs. We appreciate that every business is unique and for us to be able to provide clients with the best possible results we need to have an in-depth understanding of their company and their objectives before providing a solution. The solution - IMA portfolios - and the means of delivering the solution – an MDA. We view our relationship with our clients as an on-going collaborative process and believe we have a team with the depth and breadth of experience to construct the quality portfolio solutions you desire.
Marketing & Sales Support
Putting all the usual industry standard material aside as a given, we believe our value add is the breadth of knowledge and experience our team has to offer in whatever marketing or sales form you choose to utilise. Our clients view Watershed as the Investment arm of their business. With that in mind, they determine their market or sales approach. Whether it be; for day to day research or one of analysis of a specific investment opportunity, to help win a client by attending a client appointment, or to host a boardroom luncheon or seminar providing a Economic & Market Update, we’re at their disposal. We are only too happy to help grow your business any way we can.
Access to the Investment Team
Watershed has an open door policy. We are your client, we’re here to help. Just let us know how. Our Portfolio Managers give regular Economic & Market Updates for our Advisers clients and prospects at their boardroom luncheons and client seminars. Access to the Investment Team for their clients in this manner has proven to be a powerful value add for Advisers, particularly in these volatile markets.
Highly credentialed Investment Committee
Our investment philosophy and process is structured around the belief that macro-economic conditions and specific sector cycles drive the majority of asset class performance, both short and long term. The Investment Process starts with the Macro Investment committee that consist of our internal portfolio managers and a number of external Investment Professionals. The Macro committee meet monthly and determine the asset class and preferred sector exposures. The MDA capability allows for active and timely asset allocation and sector changes in what is an increasingly volatile global market. While the committee formally meets monthly, Asset allocation changes to any model can and will be made when deemed necessary. Our point of difference and competitive advantage is in our ability to; form a view, act on our conviction and implement (take care of all processing to market and settlements) in a timely fashion. We then form separate investment committees for each sector portfolio, appointing a chair with the relevant sector experience and an internal portfolio manager to operate the account day to day.
Research & IPOs
Investment Research, access to market events, IPOs - Institutional Investing. Watershed Funds Management is viewed as an Institutional Investor or Intermediary, and by extension our clients are afforded the benefit of coming under this umbrella. Our research and investment reach is not only extensive, but more importantly – uninhibited. We seek very specific investment solutions for our bespoke portfolios, at the Advisers bequest. You the Adviser know your client.
Investment SOA construction
Under an MDA Managed Account, the ASIC regulatory burden or onus falls upon the licensee. As we provide an end-to-end solution, we provide initial Investment SOA’s and meet all ASIC ongoing MDA requirements. We help streamline your business by taking care of the backoffice.
Portfolio Transitions & Implementation
Portfolio Transitions & Implementation (including application forms, reconstructions etc) Portfolio transitioning, implementation, reconstructions, paperwork…this administrative burden is not only the bane of all Advisers existence, but a stranglehold on practices. Watershed takes this administrative burden off the Advisers plate. It’s one of our value adds.
Ongoing Portfolio Administration & Annual Reporting
Watershed complies with all ASIC regulatory guidelines applicable to our mode of operation – MDA Managed Discretionary Accounts. Watershed is audited annually by an external ASIC registered auditor. Watershed also outsources its’ custody solutions to various platform providers. Being platform agnostic, we source platform solutions for specific Adviser needs. All platforms are different, as are Adviser needs.
Watershed provides a number of bespoke IMA offerings incorporating the use of an MDA license to deliver unique solutions.
Innovative and market focused, our heavy focus and utilisation of technology, coupled with our MDA licensing capabilities allows us to implement these strategies efficiently and effectively.
In increasingly volatile markets, the licensing capabilities of MDA’s ensures one can act on their convictions immediately at market – whether it be entering or exiting a specific investment position or entire asset class for that matter.
The inability to enact changes swiftly in a volatile market can prove very costly.