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Catering for investor priorities through tailored structures By A. Paris
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ransparency, accountability and control are three characteristics in high demand. Their importance, although always critical to investors, has been sharpened by the pandemic. Further, within the context of growing investor appetite for environmental, social and governance (ESG) strategies, these characteristics take on an even more essential dimension. The appeal of separately managed accounts (SMAs) has ebbed and flowed for a good number of years; rising in a post-crisis environment and now heightening again as investor priorities change in light of current events. As the world shifted to a virtual model in the wake of the Covid-19 pandemic, investors demanded more transparency from their partners. Managed accounts have been key to evolution within the hedge fund and alternatives industry. They increase transparency and give investors additional control. These structures provided institutional investors with greater customisation and optimisation. Through managed accounts, investors have been better able to manage cost, increase transparency and take control of their alternative asset allocation. 4 | www.hedgeweek.com
Space for sustainability Sustainability and ESG is a growing focus among investors. Cliodhna Murphy, executive director, product development, MUFG Investor Services notes: “As we navigate the Covid‑19 pandemic and the current crisis, both inside and outside the financial sector, it is worth reflecting on the factors which have driven the increased popularity of SMAs and exploring whether these vehicles could see a rise in popularity as a means of accessing ESG strategies.” Abali Hoilett, co-head funds fiduciary, Maples Group contends: “In theory, because the investment mandate of a managed account is fully customisable, it would be easy to implement various ESG factors and tailor them to the needs of a specific investor. Depending on the ultimate structure used, the use of a managed account platform would allow the investor to review their exposures from a portfolio perspective versus on a fund-by-fund basis. The managed account platform structuring allows for consistency of reporting and removing the burden on trading advisors to run separate middle and back-office functions.” Within the sustainability space, asset manager MANAGED ACCOUNTS IN FOCUS | Apr 2021
