MDA Structure

Funds held in the investor’s account are not pooled with other investors’ funds, hence do not fall under the Managed Investment Scheme legislation pursuant to Chapter 5C of the Australian Corporations Act. Instead the individual investor’s account is separated in the form of a “Client Segregated Account”. Funds are held with the Clearing Broker (the custodian) and not with CK Locke and Partners (CKL). In this way, the client holds title to the funds who, in turn, contracts with the Operator to manage the funds via the MDA Contract.

Why trade using an MDA Service?
Many investors recognise the potential benefits of trading futures markets, however find themselves constrained by time or inclination to a degree whereby traditional non- discretionary trading may not be appropriate for the individual investor’s self -management.

A MDA is the process whereby professional futures traders manage a portfolio of futures contracts and options with the aim to profit from moves in the prices of financials, commodities and currencies. Discretionary and/or Managed Futures is a growing industry worldwide that offers potential benefits over other forms of investments.

Our MDA service may be a viable alternative to traditional asset sectors, such as shares, property, fixed interest and cash, as trading via a MDA offers the potential for enhanced returns in a variety of market conditions and potentially substantial diversification of your investment portfolio.

The traditional investment portfolio of shares and property is dependent to a large extent on the growth of the economy whereas an MDA is traded independently of such external factors. A MDA investment provides direct access to the world’s major economic markets through a range of contracts covering stock indices, interest rates, currencies, energy, metals and agricultural products. Hence trading via an MDA is not necessarily dependent on rising stock markets and in many cases, profits can be generated in circumstances whereby share markets are falling.

Whilst this MDA is subject to a higher level of risk, Managed Futures Funds in general has been shown to provide return and risk levels that compare favourably with other forms of investment as reported by the MAR index (the MAR Index is prepared by Managed Accounts Report Inc, a company in New York that monitors and reports on the performance of Managed Futures around the world). The Institutional Advisory Services Group’s (IASG) Top 100 Rankings Report as at 12/2002 concluded that 9 out of the top 10 of the top performing funds as measured by percentage returns over the previous 3 years were futures based.

Despite MDA’s sharing similar features, MDA’s are not defined as  “Managed Funds” under Corporations Law and no representation whatsoever is made that this MDA is representative of a managed fund. Nor is there any implication that any MDA will experience the type of success mentioned in the above paragraph.

The main reason why an investor may use an MDA service is to seek profits via the Operator’s efforts in managing the investor’s portfolio. A MDA structure may also offer (depending on circumstances) taxation benefits because the client’s portfolio is managed as discretely belonging to the client. Ie, not pooled with other funds.

For example, a client using an MDA service may be able to off-set capital losses arising from the sale of an asset held outside the MDA against positive returns arising from the realisation of assets held within the MDA and visa versa. This may also allow flexibility for the client to determine the timing of profit realisation. Profit realisation (if any) is distributed on a quarterly basis at the request of the client. Accordingly, the client may have more control over their income and tax liabilities as a whole while being able to outsource to the Operator the responsibility for making investment decisions on a day- to- day basis. This is feasible because the Operator does not pool one client’s assets with the assets belonging to any other client for investment purposes.

MDA investors also receive individual reporting in terms of financial statements.