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Katherine Grant Benedicte Gravrand, Opalesque Geneva:

Participants at the the recent Opalesque New York Roundtable discussed the benefits of separately managed accounts (SMAs), their management and customisation.

SMAs have become a more acceptable structure in the market, said Katherine Grant, who works within the New York hedge fund group of LGT Capital Partners. The Swiss-headquartered company adopted the managed account model very early on and has gone beyond the stock selection angle of it. It now also looks at portfolio construction and factors.

"What's so powerful about the SMA is that you get a solid understanding of how these PMs risk manage," she said. I'm not calling up my managers each month to find out what made 25 bps. Instead, I have a real understanding of how the portfolio is constructed and how they will perform, especially during these factor rotations which happen at least once a year. It makes our conversations with managers more educated and we have a better understanding of each manager's vulnerabilities. In other words, who's going to get hit by a risk factor rotation and who isn't. We can use these insights to build a very informed hedge fund product."

Her team tries to identify good managers, but also looks at it from a portfolio point of view. "In other words, I could come across a great manager, but it might not be a value add to LGT's......................

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