Featured: Managed Account Platforms: An Easy Way to Invest

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…Finally, we come to the third option, the managed account platform (MAP). Here the account begins like a fund with a separate account trading a specific strategy. Since they target larger managers, this initial amount might be $5-$10 million or more, requiring a seed investor. This could be the manager themselves, a pension fund, or a family office that wants to utilize the benefits of this hybrid structure. Additional investors enter following this lead and are pooled with the other investors. But unlike a fund, the investor is given choices at this point. Since the SMA is already established, the trader can trade any amount over the minimum account size. This means that a new investor can enter with just $100k, AND since they are just given a trade level, the investor has the option to trade with leverage. In practice, this means that they could invest $200k and trade it at a 2x multiple ($200k x 2= $400k) and divide their allocation across four managers at $100k each. Since trade levels are easier to adjust in an SMA, they also get weekly liquidity and daily valuations for each manager. Like a fund, they also limit their liability to the amount they deposit, even if they trade with leverage.

Galaxy is one such group offering a managed account platform. They summarize many of these advantages in the chart below…

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