20 Happy Long Term Returns for MLC - 31 August 2005
Wednesday, 31 August 2005
SYDNEY: MLC's manager of managers investment approach turned 20 this year and MLC is celebrating as it looks back on many years of market leading innovation, significant growth and delivering on its promise to investors.
MLC's name has become synonymous with its multi-manager investment approach and its success has lead to its multi-manager assets under management growing from A$3 billion in 1985 to around A$53 billion today, making MLC the fourth largest manager of managers operation in the world*.
"Back in 1985 MLC was the only multi-manager in Australia, whereas today there are a number of copycat manager of manager products available in the market. MLC started a trend that would change the face of the Australian financial services industry," said Mr Michael Clancy, CIO of MLC Asset Management.
MLC's investment approach is all about delivering competitive and consistent returns to investors by:
" Selecting and appointing exceptional investment managers;
" Building portfolios that combine several different investment managers;
" Using a long term strategic approach to asset allocation;
" Seeking broad diversification across asset classes, regions, industries and investment styles; and
" Ensuring the investment strategy is implemented efficiently.
Mr Clancy said one of the key success factors of MLC's manager of managers approach has been sticking to a consistent investment philosophy while constantly looking for ways to innovate.
"We have recently gone back and looked at our product disclosure statements from 1985 and the way we described our investment philosophy back then has barely changed in 20 years," Mr Clancy said.
"We have consistently implemented our investment philosophy through many challenging market environments and our success in delivering to our investment objectives is testament to its robustness."
"At the same time, some of the investment options we have introduced during the past 20 years have been market leading."
"One example of this was our move from regional mandates to global mandates in 1996 and we were the first to introduce global bonds and inflation linked securities to our investment menu."
"Another example is our commitment to high conviction managers. While the industry has become increasingly focused on index and benchmark controls we have freed up a number of our managers to focus on high conviction portfolios."
"We hire managers who have a real competitive edge and a sustainable investment philosophy and this approach has lead us to appoint some fantastic managers in their formative years including Maple-Brown Abbott, UBS (Australia), Platinum, Portfolio Partners, Concord, Lazard's Australian equity team and, most recently, Highbridge."
MLC's latest innovation is to apply emulation techniques to the MLC Australian Share Fund Portfolio, a strategy MLC developed in conjunction with Vanguard Investments Australia.
"Emulation is designed to reduce unnecessary turnover within a portfolio which occurs when managers take different views on a stock and trade in opposite directions. By reducing unnecessary turnover, this strategy reduces transaction costs and capital gains tax implications, thereby increasing returns for our investors."
"Our emulation strategy has been in place for less than 12 months but so far it is meeting our expectations and we look forward to seeing what it will deliver in 12-24 months time."
Mr Clancy said the two biggest challenges facing the investment industry are time horizons and tax implications.
"Our industry is far too short term focused which results in managers managing their business risk, rather than their investment risk."
"Past performance is interesting but it should not be used to select managers or funds and managers need to be focused on delivering real returns over 5, 10 and 20 year periods, rather than focusing on outperforming over short one or three year periods.
"The second challenge is addressing the issue of tax. Tax is the single biggest cost to investors and we need to get managers thinking more about the tax implications of their decisions and focused on delivering exceptional after fees and after tax results."
*Cerulli Associates Global Multimanager Products Quantitative Update, 2005
Further information:
Stacey Mitchell, Corporate Affairs Manager, MLC
02 9966 3035
0400 305 446
Who is MLC
MLC is the wealth management division of the National Australia Bank Limited (the "National"). It is comprised of a group of companies, all of which are subsidiaries of the National. MLC provides funds, platforms and services that support the provision of quality financial advice and help people realise and protect their lifestyle goals. Through a vast network of financial advisers, MLC provides quality financial planning services, wealth creation (investments, private banking), wealth protection (insurance) and superannuation solutions to individual investors and corporate customers. MLC also provides corporate and institutional customers with out-sourced investment, superannuation and employee benefit solutions. MLC manages more than A$78 billion on behalf of individual investors and corporate customers in Australia (as at Dec 2004).
Disclaimer
Please contact Stacey Mitchell if you would like to obtain a copy of any product disclosure statement for any of the products mentioned in this Media Release. While due care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information. Except where under statute liability cannot be excluded, no liability (whether arising in negligence or otherwise) is accepted by MLC for any error or omission or for any loss caused to any person acting on the information contained in this publication.
* The information contained in this media release is for media advice purposes only. The contents are true and correct at time of publishing/issuing, however may change over time. For further information about NAB products or rates, please go to Interest Rates, Fees & Charges
