Interview with Ed Gouldstone (pictured), Linedata – Whilst managers might welcome investor requests for managed account mandates given today’s tough capital raising environment, the reality is that, operationally, they still present certain challenges. Ten years ago, most managers would have balked at the idea of taking on managed accounts, but that mindset is starting to shift. “A fund manager doesn’t necessarily want to flat refuse such a mandate, they want to consider it. However, there can be a significant cost to getting the infrastructure ready and building additional relationships,” observes Ed Gouldstone, head of hedge fund product strategy at Linedata.

By Eric Bissonnier & Francesco Samson – Robust independence Institutional investors remain, to some degree, nervous allocating to bank-owned MAPs because of counterparty risk concerns. Admittedly, some are now using independent administrators, but LumX uses a completely open architecture. Explains Bissonnier: “We built our platform from an asset manager’s viewpoint. It’s not a profit centre for us, it’s a tool that has to be as efficient and flexible as possible. All the service providers we use are independent from each other.” Samson says that complete platform independence achieves two goals: “Firstly, you avoid some of the conflicts of interest that

By James Williams – Despite the operational challenges that face managers who decide to take on managed accounts, it seems almost inevitable that as more institutional money comes into the alternatives space, managed account AUM will continue to climb. This is because capital raising, for all but the biggest and best managers, remains an almost Sisyphus-like endeavour. According to a recent industry report, assets on the leading managed account platforms rose 15.9 per cent between June 2011 and June 2012 to USD72.8billion. Managed accounts are here to stay. However, to what extent they will supersede commingled funds remains to be

Interview with Effie Datson – For CTA managers on Deutsche Bank’s dbSelect platform, 2012 has very much been a year of contrasting fortunes. According to Effie Datson, director, product head for dbSelect, 1H12 was a challenge for these trading strategies, but managers generally posted good returns in July, August and September. And, though October has been a difficult month, the long-term case for adding such strategies to a portfolio remains robust. Which is no doubt a relief for dbSelect, having chosen to ramp up its CTA manager offering to investors over the past two years. “We recently added Man AHL,

Interview with Nathanael Benzaken – Lyxor’s Managed Account Platform, with over 100 funds and approximately USD11billion in AUM, has long been a leading light for investors wanting to allocate into commingled managed accounts. And whilst this remains the easiest “gateway” into hedge fund investing for small and medium-sized institutions, there are signs that the demand for more sophisticated customised solutions is underway according to Nathanael Benzaken, deputy head of the alternative investment business line at Lyxor.   “Customisation is gaining favour with the investment community as portfolios can be designed within a specific context,” says Benzaken. Whether investors choose to

Interview with Stephen McGoohan (pictured), Man Group – Lack of portfolio transparency continues to be a major worry for investors. And whilst managed accounts provide many with the control and transparency they need when investing in hedge funds, continued market uncertainty and counterparty risk prompted Man Group to develop an online portal solution in March this year. Named Clarus, the managed account portal provides clients with an additional layer of transparency by enabling them to visualise their hedge fund allocations and gain a better understanding of the investments they’re making.   Explains Stephen McGoohan, Man Group’s head of Managed Accounts:

By James Williams – Greater sophistication among hedge fund managed account investors is changing the way managed account platforms (MAPs) operate. Flexibility and customisation are at the forefront of the offering among independent platforms, free of the regulatory manacles being imposed on banks. What appears to be driving this shift towards a more investor-centric model of customised solutions, is the changing nature of the investor. Increasingly, large institutions – state pension funds, insurance companies – are looking to allocate directly to managers they favour via bespoke single mandates, or, to a lesser extent, via portfolios of mandates. They have the

Hedge fund compensation rose in 2012 following a challenging environment in the prior year, as industry assets rose to a record level, according to HFR and Glocap’s 2013 Hedge Fund Compensation Report. Average gains across functional roles varied significantly as a direct result of a number of factors, with marketing and compliance and senior investment professional roles at profitable funds experiencing the largest increases. Overall, the average change ranged from a 15 per cent increase to a decline of nearly five per cent over 2011 levels. Trends in 2012 include a cautious hiring environment, increases in profit sharing and consolidation