The IMA service is the professional fixed income management business unit within MST Income that is available to clients who qualify as a wholesale investor and have a minimum of $1M of capital to invest.
IMA clients each own a stand-alone Individually Managed Portfolio (IMP) managed by the IMA Investment Management Team (IMT) in accordance with the IMA Program selected by the client.
All investment decisions for the IMP are made by the IMT in accordance with the selected program’s remit.
The service currently offers two unique investment programs, designed to appeal to a broad range of investor appetites, and a third opportunity of customisation of investment mandates for investment in excess of $10M.
All programs only invest in Australian Dollar denominated bonds and contain no derivative exposure.
The IMA service has been in operation since October 2015 and has delivered a performance record of merit.
The service combines a number of unique attributes to ultimately deliver clients professional management of a stand-alone (IMP) account that contains a highly diversified portfolio of assets that are directly owned, the income from which can be either distributed or re-invested, as instructed by the investor.
MST’s unique attributes include:
Secondary market access to volumes less than $500k face value ownership via the ‘Direct Bond’ Service.
Access to both external and in-house (MST Financial) research.
Liquidity for investment grade assets via the interbank market.
Liquidity for non-investment grade product via MST Financial distribution platform.
The IMA Investment Management Team (IMT) are very experienced and seasoned fixed income market professionals.
Kieran Quaine is the Head of Investment Management Fixed Income at MST Financial and oversees activity of both IMA and Unit Trust Portfolio Management. He has over 30 years’ of extensive experience within the fixed income market, primarily as fund manager in charge of investing multiple billions of dollars across a wide range of investment mandates.
Megan Romeo is the Head of IMA Portfolio Management. She has over 10 years’ experience in the financial markets, primarily, prior to the current role, as the Valuations Product Manager at S&P Capital IQ.
Refer to our website for an in-depth profile on our full team.
MST’s IMA provides you 24/7 read only access to the portfolio - its composition, transaction history and daily valuation via the MyFIIG online portal, managed by the appointed administration provider, FIIG.
In addition, as a client of our Individually Managed Account Service, you will receive a monthly quarterly report outlining the investment manager’s future strategy and a commentary on recent economic events including drivers of current performance.
An IMA, or Individually Managed Account, is a stand-alone vehicle in which a singular clients assets reside.
Those assets within the IMA are still held in safe custody with MST as the custodian and JP Morgan as the sub-custodian.
Assets within a client’s IMA are segregated from any and all other investor holdings, including the assets owned by MST Securities.
Conversely, within a trust structure, assets are pooled or aggregated, and investors own units in the trust. Their entitlement to ownership is not ‘direct’ but a share of the pool.
In various circumstances, trust unit holders will always have less control over their asset performance than IMA holders. This is simply because as the owner of the IMA you can ultimately dictate various terms in those circumstances.
Where an asset class is under pressure, and speculation that devaluation will continue, a ‘run’ on a trust is not uncommon. In such a period the Investment Manager may be forced to sell assets (that can be liquidated) at devalued prices to satisfy that percentage of unit holders who have demanded an exit. The ‘run’ can be self-fulfilling and deliver a devaluation that would not otherwise occur. Think of the GFC period. If you were in the minority, your valuation (of your share of the retained position) will be affected. But probably more significantly, the assets that are sold to satisfy liquidity may deliver an ‘unbalanced’ portfolio. In such events, liquid assets may be sold first, and residual less liquid assets may be retained.
Conversely, during an equivalent period to that described above, holders of an IMA will not experience such a ‘run’ and can effectively determine their next move in isolation and for their sole benefit. That said, valuations may decline, but a crystallisation of the devaluation, and a subsequent impact of rebalancing the portfolio, is controlled by the individual owner.
It is worth noting that in circumstances where MST ceased to operate, or even exist, client assets held directly are protected because the assets are held in safe custody (with FIIG Securities as Custodian, with JPM as sub-custodian).
Yes. Your bonds do not form part of MST’s assets.
MST utilises FIIG as custodian, who in turn has appointed JP Morgan as sub-custodian. Your portfolio assets are held in an account in your name. You retain 100% beneficial ownership of your bonds. This means that your bonds are your assets at all times and do not form part of the assets of MST or the custodian. If FIIG as custodian or JP Morgan as the sub-custodian were to cease operations, your bonds will be safe and remain yours.
FIIG, as custodian, holds your assets as bare trustee either in their name or in the name of a sub-custodian or a Securities System (as appropriate). The beneficial interest in your assets is held by you. MST, FIIG and JP Morgan acknowledge and confirm that the beneficial interest in your assets held under custody in accordance with the Client Custody Agreement shall, at all times, vest in you. In that regard, either party are unable to affect the 100% beneficial ownership of your assets.
As a licensed custodian, FIIG Securities is required to maintain net tangible assets of greater than $10 million at all times.
The Investment Programs offered are designed to appeal to a broad range of risk and return appetites. Higher yield, but also higher risk, is derived by a higher allocation to lower Investment Grade rate bonds, or, non-investment grade assets according to Investment Mandate rules. Risk is however mitigated by a high degree of diversification.
A portfolio will contain a minimum of 20 unique names once cash is deployed within the initial 30 day period, before diversity will increase further, to match the preferred exposure of the sample portfolios. All programs provide the investor with the option to distribute income (coupons) to an external bank account, or reinvest.
In order of lowest to highest entry yield (and income), IMA Programs include:
‘Conservative Income’: is comprised of assets that are 100% Investment Grade. A maximum of 20% of that Investment Grade exposure can be ranked Subordinate in the capital structure.
‘Income Plus’: is our higher yield flagship investment program. It maintains a minimum of 80% Investment Grade assets and restricts the 20% capacity for Non Investment Grade Assets to Asset Backed Securities. Of the 80% Investment Grade exposure, a maximum of 20% can be ranked Subordinate in the capital structure.
Elements of these ‘off the shelf’ product designs can be utilised within customised investment mandates.
Conservative Income management fees are 0.54% p.a. whilst the Income Plus management fee is 0.64% p.a.
Fees for a Customised Investment Program are by agreement.
Custody fees are 0.11% for the first $5m and fall to as low as 0.06% for amounts over $5m.
Please contact [email protected] or 02 8999 9988
Our team of fixed income experts will facilitate account opening and other necessary administration that must be completed.
Yes. The IMA service accommodates various ownership vehicles, including:
Singular and dual owner name
SMSF
Trust
Corporate
Yes, as long as you meet the minimum investment volume criteria for each separate account. Note that you will require a separate Macquarie Bank CMA (Cash Management Account) for each IMA Investment Program opened.
Yes, this is called an ‘in-specie transfer’.
If you hold assets that are not in our programs, we may still take them (where requested) and deliver exit price efficiency as we rebalance your portfolio. All assets must be in Australian dollars.
No. You can subscribe to one of three unique investment programs. Bonds are selected by the Investment Management Team, and will be subject to change over the life of your investment.
However, if you have capital in excess of $10M to invest, you can choose to customise your investment mandate and therefore influence the range of bonds invested in.
For two reasons:
Interest accrual benefit - holding exposure to the assets provided by you, whilst seeking opportunity to substitute with preferred assets at an optimal price and in the required volume, will generally, but not always, be preferable to holding cash.
Securities liquidated by the manager acting for the IMA will achieve a price very close to valuation whilst, if done by yourself, will likely be subject to a higher brokerage fee, especially if dealing in small parcel sizes.
Yes, subject to the following:
You need to ensure the remaining asset value is greater than or equal to the minimum investment amount for your program.
You must be aware that the IMT will subsequently need to rebalance your exposure appropriately.
Rather than simply selling one or more bonds, the IMT needs to rebalance the exposure to every single bond held. This is achievable, and indeed facilitated by the Direct Bond service value proposition, but it is best that investors determine their capital investment into IMA with a longer rather than a shorter term focus.
If choosing to withdraw capital you will be required to fill out and return the IMA Withdrawal Form to [email protected].
Deposit the funds into your CMA and advise [email protected] so the IMT can prepare to invest the additional funds.
The IMA IMT have control over your CMA because your cash holdings are part of your portfolio serving as the funding vehicle for investment. Those cash holdings will rise and fall as a function of investment and divestment activity of the IMT. Unscheduled cash withdrawal can impede the ability of the IMT to manage your IMA consistent with the investment strategy.
No. Cash holdings may climb for a number of reasons, but in all cases will contribute to the total ‘duration’ or average term to maturity profile of the portfolio. Often cash will climb awaiting improved bond pricing or as a defensive measure if bonds are perceived to about to devalue as a function of a lift higher in yields, and/or credit margins widening. Such circumstances will be well telegraphed in the monthly reports, either in advance or arrears.
Once subscribed to any investment program, clients of IMA can switch programs either in entirety or partially, so long as the minimum subscription for each new program is met.
A new application will need to be completed in order to open a new mandated IMA account including the establishment of a new Macquarie CMA account if you are subsequently retaining multiple investment programs.
When switching, assets held in the former program that are common to both investment mandates, can be retained (by ‘in specie’ transfer).
In regard to income that is paid by bonds, in the form of coupons, each IMA investor has the option to either:
Distribute that cash flow directly to an external account
OR
Retain the cash flow in the CMA for reinvestment.
Those seeking to spend their income would choose to distribute, whilst those seeking to build their wealth would opt to re-invest. You can set your re-investment option during the account opening phase. It can also be changed subsequently.
Please complete the IMA Change of Details Form or email a request through to [email protected] including the bank account details.
Statements will be emailed to your nominated email every month. You or your authorised representatives (e.g. accountants & advisors) can also access MST statements on your MyFIIG portal.
Trades settling on the same day are netted as one payment, i.e. if client has a $10,000 purchase and a $40,000 sell settling on the same day, they will see a deposit of $30,000 into the Macquarie CMA.
Macquarie statements can be accessed via the online Macquarie portal. Please visit https://www.macquarie.com/au/personal/
If you do not have the details for your Macquarie online portal, please contact Client Services on 1800 01 01 81 or email [email protected] who will in turn contact Macquarie on your behalf. Alternatively, you may contact Macquarie on 1800 806 310.
CMA accounts with a balance above $5,000 will receive 2.25% pa*. *Interest rates are subject to change so please visit https://www.macquarie.com/au/personal/bank-accounts/cash-management for the most up to date rate.
Clients will be contacted two weeks prior to the expiry date to renew the Wholesale certificate. In the event the certificate cannot be renewed, the assets held in your IMA portfolio can be transferred to a Direct Bond portfolio.
Yes. Please have your accountant or advisor contact [email protected] to set this up for you.
No, there is no GST applied to commission rebates, and no tax invoice is issued. Payment is treated the same as any interest.
Please complete the IMA Change of Details Form or email a request through to [email protected] including the bank account details.
Exiting the investment program is done on a best efforts basis to get you the best execution price possible. However if you need to exit the investment program urgently we can consider a more aggressive exit approach. The Investment Management Team operate in your best interest. Where delayed, it may be a function of the time taken to secure the highest possible bids in the market place, which in turn has the objective of delivering the highest possible return performance.