Benefits and Drawbacks of a Managed Account
Benefits of a Managed Account
1. Ownership: Account is in the investor’s name and segregated from other investment assets. The fund manager cannot move capital. The account is completely in the investor’s control.
2. Transparency: Managed account offers full disclosure at the convenience of the investor. Investors may view the account at any time. The transparency allows for enhanced monitoring and due diligence.
3. Liquidity: Offers the investor liquidity on their own terms. Terms are agreed on and assigned in the Client Agreement.
4. Notional funding: Less than 100% of the nominal account size is required in actual cash. Thus notional funding creates a leverage effect that can allow for more efficient and prudent use of investment capital. Notional funding enables the investor to spread risks across various diversified investments.
5. Location: Accounts can be located onshore or offshore, opened and traded from various jurisdictions.
6. Negotiable Fees: Management and performance.
Drawbacks to a Managed Account
The managed account structure requires the investor to be responsible for managing and maintaining the account. If notionally funded, the investor needs to ensure there is adequate capital to meet the margin requirements. Similar to other trading accounts, the investor is responsible for tax filings, accounting, and administration.
Solution: Managed Account Platforms
There are a number of third party providers that can provide a managed account structure and also manage the administration required. Additional benefits include manager due diligence, risk management experience, analytics and real time valuation. The cost for these services ranges however Auspice is happy to refer you to a platform provider. Typically this option is available on accounts over $5 million nominal.
| Account Details || |
| Legal Structure: || Separately Managed Account |
| Management Fee: || Negotiable % |
| Incentive Fee: || Negotiable % |
| Minimum Investment: || $1.0mm USD$ nominal |
| Unit Pricing: || $USD or $CAD |