Wed, Aug 20, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Moody's: Hedge fund managed accounts continue to surge in the near term but some operational risks remain

Wednesday, May 26, 2010
Opalesque Industry Update -- Managed accounts have experienced extraordinary growth in the aftermath of the financial crisis and the reasons for this trend are examined in a new report published today by Moody's Investors Service. The report takes an in-depth look at this type of structure and the inherent risks involved, and assesses the future impact it may have on the hedge fund sector as a whole.

"Although managed accounts have been around for a while, they enjoyed a surge in popularity after the market upheaval of 2008 due to the benefits they offer, such as access to liquidity and ownership of assets," says Joanne Job, a Moody's Analyst and author of the report. "The financial crisis coupled with many hedge funds imposing liquidity restrictions prompted investors to look for fund offerings that gave them more control over their investments and managed accounts filled this market need."

In a managed account structure, a hedge fund manager is an investment advisor who is granted the authority to trade on the account, while the account holder has ownership and control of the assets. This arrangement provides investors with more transparency and can also, depending on the type of managed account, generally insulate them from the knock-on effects of other investors pulling out of the fund.

Estimates suggest that managed accounts through the top ten platforms have reached approximately $41bn or 2% of the total hedge fund industry assets.

The report notes that managed account adoption was limited in the past because this type of instrument is generally more costly than direct hedge-fund investments and can pose operational complexities. As the market continues to normalize, these limiting factors could again become more important and reduce future growth of managed accounts. Furthermore, the report highlights the variations in the different managed account structures available and details some of the operational risks and challenges faced by investors utilising these investment vehicles.

"We believe that the managed account segment will continue to grow in a pronounced way in the short term and more moderately in the medium to long term," concludes Ms. Job.

The report is titled, "Hedge Funds: Investing Through Managed Accounts" and is available on www.moodys.com/managedinvestments.


Source


Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing
  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Private equity follows hedge funds into reinsurance for long-term capital[more]

    From Artemis.bm: It’s not just hedge funds that are entering the insurance and reinsurance market in search of so-called long-term capital to put to work in their strategies, private equity firms targeting the space are also seeking opportunities to add assets under management. The entry of large pr

  2. North America – New York City’s next hot neighborhoods targeted with property funds[more]

    From Bloomberg.com: New York’s real estate world is filled with tales of ordinary people who bought property decades ago and saw values skyrocket to the millions. Seth Weissman is seeking investors to get in early on the next hot neighborhoods. The veteran of Goldman Sachs Group Inc. and hedge

  3. Investing – George Soros bets $2bn on stock market collapse, Warren Buffett's Berkshire reveals Charter stake, cuts DirecTV, Hedge funds lusting to cash out of MGM, Top hedge fund managers are buying Ally Financial, Hedge funds dumped 5m Herbalife shares in Q2, Paulson & Co hedge fund ups Puerto Rico real estate bet, Netflix Inc., Citigroup Inc, Google Inc are top new picks in Tiger Management’s 13F[more]

    George Soros bets $2bn on stock market collapse From Newsmax.com: Billionaire investor George Soros has increased his financial bet that U.S. stocks will collapse to more than $2 billion. The legendary hedge fund manager has been raising his negative bet on the Standard & Poor's 500 Inde

  4. Institutions – Texas Employees sets 2015 tactical plan for alternatives, CalPERS' real estate consultant cautions the pension fund's investment committee, Why Sunsuper likes hedge funds[more]

    Texas Employees sets 2015 tactical plan for alternatives From PIOnline.com: Texas Employees Retirement System will invest in up to four new hedge funds in the next fiscal year, which begins Sept. 1. Trustees approved 2015 tactical investment plans for the hedge fund, private equity and in

  5. Investors now net short S&P500 and increased Russell shorts, technicals suggest further selling[more]

    Komfie Manalo, Opalesque Asia: Market Neutral funds increased their market exposure to -1% net short from -6% net short last week, according to Bank of America Merrill Lynch’s Hedge Fund Monitor. The report also added