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By Benedicte Gravrand, Opalesque London: Last year, several European FoHFs managers told Opalesque that separately managed accounts, although relatively popular, had always existed and were not likely to be a growing trend. This was the correct assumption to make at the time.

The advantages of those discretionary mandates, compared to funds, are that they offer more flexibility; they are tailor-made; investors may have more contact with the portfolio managers; fees are generally lower; the follow-up and reporting are more intensive; there is no use of leverage; and from the manager's perspective, each can handle several portfolios at the same time. Investors requiring managed accounts should also come up with more substantial capital than for FoHFs. The difference in performance between FoHFs and managed accounts is minimal, they said.

On the other hand, although some managed accounts offer very good liquidity terms, some have lock-ups, so liquidity is not always flexible (whereas FoHFs have predictable liquidity); changes of allocation may take more time to process; and the administration of those accounts is more time-consuming. Some say that hedge funds and FoHFs are in fact a 'shop-window' for those investors looking for managed accounts; they can see what the fund managers pursue and check if that fits their criteria. And all sorts of investors invest in managed accounts.

However, there are some indication......................

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