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B. G., Opalesque Geneva: SMAs are vehicles that follow the principles of hedge fund investing but are tailored to a single client rather than a pool of investors. Offering SMAs to investors has been growing in importance as a competitive necessity among hedge funds in the post-Madoff era, according to SS&C. They provide investors with greater transparency and liquidity but also tend to cause operational headaches for hedge fund managers who lack the infrastructure to support a scalable SMA offering. Some may even characterise an SMA as "just a huge side letter," meaning the client agreement contains caveats as to how the money can be invested. Nevertheless, SMAs are here to stay as a very tangible investment option.
Seward & Kissel LLP, a large U.S. law firm, has looked into the current state of separately managed accounts (SMAs) within the hedge fund industry over the past 12 months. According to them, investor demand for bespoke products has resulted in an increase in SMAs.
"The demand by investors for specific terms and strategy exposure is substantial, and only growing, which has been a large contributor to the increase in SMAs," said Steve Nadel, a partner in the Investment Management Group of Seward & Kissel and lead author of The SMA Snapshot Report. "We feel t...................... To view our full article Click here
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