Wednesday 10 October 2018 by Guest Contributor At FIIG

Commonly asked questions about the Managed Income Portfolio Service

Learn more about FIIG’s Managed Income Portfolio Service (MIPS). In this article, Nandita Alva, our new MIPS Product Manager, discusses the features and benefits of the service and answers commonly asked questions


deepdive

For full list of FAQs click here

1. Tell me more about the Managed Income Portfolio Service

nanditaMIPS is the professional fixed income management business unit at FIIG Securities available to clients who qualify as ‘wholesale’, meaning they have a minimum of $250,000 to invest.

  • MIPS clients each own a stand alone Individually Managed Portfolio (IMP) managed by the MIPS Portfolio Management Team (PMT) in accordance with the MIPS Program selected by the client.

  • All investment decisions for the IMP are made by the PMT in accordance with the selected program’s remit, or Investment Mandate.

  • The service currently offers three unique investment programs, designed to appeal to a broad range of investor appetites, and a fourth opportunity to customise investment mandates for investments over $5m.

  • Programs only invest in Australian dollar denominated bonds and contain no derivative exposure.

  • MIPS started operating in October 2015 and has delivered a performance record of merit.

MIPS as an investment manager, is independent of FIIG Securities, yet MIPS clients benefit from the product design advantages and infrastructure that FIIG Securities provides.

2. What differentiates MIPS from other fixed income investment managers?

The service combines a number of unique attributes built by FIIG Securities to deliver clients professional management of a standalone IMP account containing a highly diversified portfolio of assets that are owned direct. The income can be either distributed or re-invested, that’s up to you.

FIIG’s unique attributes include:

  • Secondary market access to volumes less than $500,000 face value ownership (as low as $10,000) via FIIG’s ‘DirectBond’ Service.

  • Primary market access to high yield assets via FIIG’s Debt Capital Markets (DCM) origination service and guaranteed allocation without obligation to commit.

  • Access to both external and in-house research.

  • Liquidity for Investment Grade assets via the interbank market.

  • Liquidity for Non-Investment Grade product via FIIG’s distribution platform.

3. Tell me more about the MIPS Investment Management Team.

The MIPS PMT are very experienced and seasoned fixed income market professionals.

  • Kieran Quaine is Head of MIPS and senior portfolio manager. He has over 30 years’ of extensive experience in the fixed income market, primarily as fund manager in charge of multiple billion dollar investments across a wide range of investment mandates.

  • Megan Romeo is assistant portfolio manager. She has over eight years’ experience in financial markets, primarily as valuations product manager at S&P Capital IQ.

Refer to our website for an in depth profile on our full team, including our head of distribution and our product manager.

4. Walk me through the different investment programs available

The investment programs 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 Non-Investment Grade assets. Risk is mitigated by a high degree of diversification.

A portfolio will contain a minimum of 20 unique names once funds are deployed to match the preferred exposure of the sample portfolios. All programs provide the investor with the option to distribute income known as coupons to an external bank account, or reinvest.

In order of lowest to highest yield and income, MIPS Programs include: 

  • Conservative Income comprises of 100% Investment Grade assets. A maximum of 20% of that Investment Grade exposure can be ranked ‘subordinate’ in the capital structure.

  • Core Income comprises a minimum of 75% Investment Grade and a maximum  of 25%  Non-Investment Grade assets. All of those assets must rank senior in the capital structure.

  • Income Plus is our high yield flagship investment program. This can contain a maximum of 75% Non-Investment Grade assets and therefore a minimum of 25% Investment Grade assets. All Non-Investment Grade assets must rank senior in the capital structure.

Refer to the website for a guide of the current yields to maturity achievable across all programs.

5. How does MIPS fit within the wider FIIG Business?

MIPS is a segregated business unit owned by FIIG Securities that operates stand alone, segregated completely from the broader FIIG Securities brokerage business by ‘Chinese walls’. However, that does not preclude MIPS from transacting with FIIG Securities for the advantage of MIPS clients. MIPS also deals with the broader investment banking community.

  • Segregation between MIPS and FIIG Securities is in place to avoid conflicts of interest, ensuring that the decisions made by the portfolio manager are in your best interests.

  • MIPS deals with FIIG Securities where the MIPS value proposition seeks to take advantage of the key attributes of FIIG Securities product design, being the DirectBond service, parcel sizes below $500,000, and as low as $10,000, and DCM, primary lead bond deals.

  • MIPS also deals with the broader wholesale bank market, the treasury product distribution arms of domestic banks and international investment banks, when seeking optimal and efficiently priced distribution of investment grade, highly liquid assets.

6. I’m interested in becoming a client of the Managed Income Portfolio Service Business, how do I do that?

Please contact Marcus Blake, Director of Distribution at Marcus.blake@fiig.com.au or call 1800 01 01 81.

Marcus will help you open your account and complete other necessary administration. Some administration can be pre-populated for you if you are an existing client of FIIG.

7. I have just opened a MIPS portfolio account, can I choose my own bonds?

No. You can subscribe to one of three unique investment programs. Bonds are selected by the portfolio management team, and will be subject to change over the life of your investment.

However, if you have more than $5m to invest, you can choose to customise your investment mandate.

8. I am already a FIIG Securities client. Can I transfer bonds into my MIPs Portfolio Account?

Yes, this is called an in-specie transfer.

Note that all assets must be in Australian dollars. 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.

9. What is the reinvestment option?

 In regard to income paid by bonds in the form of coupons, each MIPS investor has the option to either:

  • Distribute that cash flow directly to an external account, or

  • Retain the cash flow in the Cash Management Account (CMA) for reinvestment

Those seeking to spend the income would choose to distribute, while those seeking to build their wealth would opt to reinvest. You can select your reinvestment option during the onboarding process.

10. Where can I access my statements? Can my advisor or accountant also access these?

Statements will be emailed to your nominated email every month. You or any authorised contacts such as accountants and advisors can also access FIIG statements on your My FIIG portal.

For a full list of our FAQs, please refer to our website.