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The Outlook for Managed Accounts

Managed accounts have increased in popularity since the 2008 global financial crisis due in large part to the fact they provide more “TLC” (an acronym for transparency, liquidity and control) than LP structures. However, they also offer investors numerous other advantages. At this month’s EisnerAmper breakfast series for fund managers and investors, a trio of esteemed panelists shared their perspective but also cautioned the attendees about challenges of these structures.

The speakers included:

Michelle McCloskey, Senior Managing Director, Man FRM

Michael Marcus, Partner, Head of Manager Research, Prelude Capital

Tim Ng, Chief Investment Officer, Clearbrook Global Advisors

 
Here are what the panelists said:

  • Managed account platform providers are able to access smaller hedge fund managers that outperform. Often, these managers are difficult to access by institutions given they don’t meet their AUM threshold.
  • Managed accounts often provide investors with more information than LP structures. But oftentimes, allocators aren’t educated on how to comprehend all of it, so the provider needs to make it easy for them to understand.
  • Macro strategies in managed account format are poised for robust inflows from the platforms.
  • Sovereign wealth funds have started to increase their interest in managed accounts because they are seeking a balanced portfolio with not too much risk. 
  • Despite the robust growth in the liquid alternatives space, most managed account platforms would have difficulty putting together a multi-manager multi-strategy platform made up of ’40 Act offerings arguing most hedge fund strategies aren’t viable in that format.

Stay tuned for the next breakfast on Strategic Partnerships/Seeding June 10.

Elana Margulies-Snyderman is an investment industry reporter and writer who develops articles, opinion pieces and original research designed to help illuminate the most challenging issues confronting fund managers and executives.

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