Horizon Cash Management, an investment adviser specialising in active cash management solutions for the alternative investment industry, has launched the Emerging Manager Fund Cash Account.
Horizon created the account to provide small and emerging fund managers with a safe alternative for cash balances that are in excess of margin requirements.
The Emerging Manager Fund Cash Account is unique because the typical separate institutional cash management account requires a minimum balance of USD10m or more, especially one that requires custody. Horizon’s new account requires just USD1m for cash balances that are in excess of margin requirements.
Horizon recognised that emerging managers and other small funds need cash management outside of their Futures Commission Merchant (FCM) accounts, after witnessing what occurred during the recent implosions of MF Global and Peregrine Financial Group. The excess cash left in those FCM accounts was held up in bankruptcy. This recognition was verified by Horizon’s 2012 CTA/CPO Survey, The Aftermath of MF Global and Peregrine Financial Group Meltdowns: A Crisis of Trust. The results of their survey revealed that 63 per cent of respondents have been in business less than 10 years, and 54 per cent of respondents manage under USD5m. Of those respondents, 73 per cent have been impacted by one or more FCM failure. Just over USD390m of customer segregated funds was initially frozen in the bankruptcies experienced by this group.
Diane Mix Birnberg, Horizon founder and chairman, says: “We saw that emerging managers need solutions for protecting customers’ assets, and we responded with a product idea whose time has come. Horizon is happy to assist new and smaller managed futures funds with a cash management account specifically created for these emerging managers and their investors.”