If you’re looking for another investment vehicle that offers better flexibility, then an understanding of the separately managed accounts should form part of your investing education. These investment vehicles are also called wrap accounts and the current favorites of seasoned investors and an option for wealthy investors looking for alternative investment options. The leading investment firms and brokerages are now carrying and supporting these investments including industry leaders like Morgan Stanley, Merrill Lynch and UBS. So what makes the ‘wrap accounts’ click in the eyes of seasoned investors and business owners/
It’s all about customization– This is by far the strongest point of the wrap account, allowing investors to choose the stocks and avoid certain sectors. For example, you can focus your investments in technology, or you can even diversify by investing in food and beverage stocks. With customization comes a convenience that cannot be realized with other investing options. Managers can be assigned for value stocks, foreign bonds and other forms of stocks. These managers can manage your investment and tap into market-beating strategies. And when a certain manager failed on his job description in mitigating the losses or in bringing in the profits, the services of the manager can be terminated. And if the manager has been constantly beating the market, then his services can be retained.
Accessibility and exclusivity-These investment vehicles offer investors instant and convenient access to investments, making it easier to move investments from or into the fund as long as there are no changes in beneficial ownership. The movement of assets into an SMA from another investing portfolio will not involve capital events. Other investors will appreciate the exclusivity that comes with the fund. Since the initial investment is higher compared to other investing options, the individual investor is an exclusive company who desire a different way to invest. The exclusive arrangement can be a factor for investors who want premium attention and services for their investments.
These are the best reasons why the separately managed accounts are gaining traction in the industry. The minimum investment requirements may be high compared to others, but these investment options provide better flexibility, convenience and exclusivity.