'Major milestone': Managed accounts FUM surpasses $200bn

In its latest biannual FUM Census, the Institute of Managed Account Professionals’ (IMAP), produced in conjunction with Milliman, found that managed accounts funds under management (FUM) hit $205.58 billion as at 30 June 2024, including new investment inflows of $14.9 billion.

These figures show an increase of $10.56 billion from the previous six months, and a $43.84 billion, or 27.1 per cent, annual increase on 30 June 2023, which saw $161.7 billion FUM.

IMAP chair Toby Potter noted the significance of these results as managed accounts FUM continues to grow.

“The managed account industry sector has reached a major milestone in breaking through to over $200 billion in funds under management using managed accounts. Strong inflows of $14.9 billion for the second half of 2024 added to the steady investment performance,” Potter said.

“Managed discretionary accounts (MDAs) are 25.4 per cent of the market FUM, with steady demand for the tailored portfolios offered via MDAs. Reported FUM for MDA programs is down for technical reasons due a previous participant no longer participating as a result of changed corporate policy in the Census.”

According to the findings, MDAs now total $52.38 billion in FUM, up $8.23 billion from $15.96 billion on 30 June 2023. Monthly income scheme (MIS) and self-managed accounts (SMAs) continue to make up the most significant portion of FUM with $129.01 billion, up $34.11 billion from $94.90 billion on 30 June 2023.

Potter added: “The adviser/licensee market use of SMAs via platform providers is still a strong driver of overall FUM growth. There are now eight organisations with more than $10 billion in FUM.”

As the advice profession looks for ways to save time and increase their client capacity in order to meet the rising demand for advice, many have turned to managed accounts as a method for saving time.

Highlighting the potential benefits of utilising managed accounts, research released by Lonsec and VBP-owned Elixir Consulting found that among the 171 advisory firms surveyed, 52 per cent were utilising managed accounts, some of which reported saving up to 20 hours a week by doing so.

The Managed Accounts Research Report 2024 found that, of the practices reportedly using managed accounts, around 63 per cent were able to save up to 10 hours a week, 22 per cent estimated 10 to 15 hours, and six said up to 20 hours.

Milliman practice leader, Australia Victor Huang noted that, while concerns have been circulating for some time now due to inflation and the uncertain economic environment, these findings reflect a somewhat stabilising market.

“The investment markets have recorded steady growth in the first six months of calendar 2024 with a 4.2 per cent increase in the value of the ASX/S&P 200 Accumulation Index, giving an annual growth rate of 11.8 per cent increase from 1 July 2023 to 30 June 2024,” Huang said.

“The half year to 30 June 2024 has seen inflation fears start to recede, weak economic growth and market adaption to global risks. Equity performance has been positive with fixed income also doing well as interest rate expectations fell for the second half 2024.

“Looking forward we expect a continued high level of volatility in the markets even if shocks and market eddies are likely to be less frequent. This is in part due to the UK change of government and the recent Democratic party upswing in the US elections contributing to a reduced likelihood of a Trump return.”

The Census collected data from 46 organisations, both large and smaller, with varied offerings, adding up to a “healthy competitive market with a broad range of offerings to meet differing needs from both client investors and advisers”, according to Potter.