How far can managed accounts go?
Over the past decade, there has been an inverse correlation
between the strength and stability of markets and the demand
for managed accounts. That, says Loren Katzovitz of Guggenheim
Advisors, is the main explanation for why investors have been
slow to embrace the concept of managed accounts over the past
10 years or so.
"We were convinced that after 9/11 there would be growing
demand for managed accounts," he says. "But we were surprised
by how strong markets were in 2003, 2004 and 2005, which helped
people to get comfortable again with conventional hedge fund
investing. It took the events of 2007 and 2008 to encourage
people to focus on the fact that you are at risk if you don't
know what your managers are doing with your money. I think
we'll see more institutions turning to managed accounts because
of their fiduciary duties....