Managed accounts - conclusions | KPMG | GLOBAL

Managed accounts - conclusions

Managed accounts - conclusions

Managed accounts are expected to increase in popularity.


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Managed accounts provide institutional investors with a customized solution

Managed accounts will become a crucial component of the hedge fund industry. To grow assets under management, access to hedge funds will continue to evolve to meet the needs of institutional investors looking for investment solutions. With managed accounts, investors get a customized hedge fund solution that offers

  • full transparency
  • control of underlying investments
  • improved understanding of liquidity
  • better context of hedge fund investment with the overall portfolio.

Infrastructure providers are anticipated to address some the increasing complexity and operational cost.   

Key considerations for hedge fund investors

  • What degree of transparency do you have over your hedge fund investment; do you know what the underlying assets actually are; and do you have enough transparency to understand how the portfolio is being managed?
  • Do you own your hedge fund investments directly; how much control do you have over them; and is it balanced in your favor or the manager’s?
  • What is the actual liquidity of your hedge fund investment; is it affected by different layers of liquidity (for example, the underlying investments and the commingled fund); and how would it be affected in a stressed market environment?
  • Can your hedge fund investment benefit from greater customization; would a more bespoke investment mandate improve its contribution to your wider portfolio; and would bespoke commercial terms improve the alignment of interests?

Key considerations for hedge fund managers

  • Are you effectively positioned to benefit from the ongoing evolution of the hedge fund industry; are you sufficiently attractive to institutional investors; and can you meet their more stringent demands?
  • Do you offer investors managed accounts; does your investment process lend itself to their use; and what is the commercial cost/benefit of doing so?
  • Are you positioned to effectively run managed accounts; do you have sufficient investment resources; and is the operational structure in place?
  • Are you benefiting effectively from managed account infrastructure providers; does it make you more accessible to investors; and what are the commercial benefits to you?

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