AIMA publishes guidelines on establishing a managed account

The Alternative Investment Management Association (AIMA), the global representative of alternative investment managers, has published a guide for fund managers wishing to establish a managed account, a popular form of investing in hedge funds that gives greater control over the management of the account to the investor.

AIMA’s Managed Account Guide aims to provide fund managers with a better understanding of what to expect when offering managed accounts and what some of the operational and regulatory challenges are.

Its publication comes amid continued investor demand for managed accounts, which offer greater transparency and give investors a bigger say over everything from the investment strategy to the fund’s choice of service providers. Managed accounts can also insulate investors from liquidity fluctuations that can arise in traditional commingled funds when new investors subscribe to the fund or existing investors leave.

The guide offers detailed insight on topics that need to be considered when setting up and offering a managed account. It includes sections on structuring, fees and expenses, and conflicts of interest.

Jack Inglis, CEO of AIMA, said: “Managed accounts are increasingly popular among institutional investors and these segregated structures have underpinned the changing investor/manager relationship since the financial crisis.

“But they are not for everyone, and there are a number of issues for managers and investors to consider, ranging from minimum investment levels and regulatory changes to fees and expenses. Our Managed Accounts Guide will help managers manoeuvre this complex landscape and decide the best course of action for their businesses.”

The Guide is co-sponsored by Simmons & Simmons, the law firm, and Societe Generale, the financial services group.

Devarshi Saksena, Partner at Simmons & Simmons, said: “We are delighted to support AIMA in this publication. We are increasingly seeing a wide range of clients structuring managed accounts in response to demand from strategic investors. We are happy to lend our support in sharing our expertise with the industry.”

Managed accounts and other forms of customised and segregated product offerings are increasingly popular. According to a survey last year by AIMA, KPMG and the Managed Funds Association, around half of all hedge fund managers are offering either “funds of one” or managed accounts, and a further 21% plan to offer such products by 2020.