Do managed accounts reduce asymmetries or enhance them? It may depend on who you ask.
May 5th, 2009 | Filed under: Hedge Fund Industry Trends, Today's Post
One of the more enduring criticisms of the so-called “hedge fund model” has been that the relationship between manager and investor is asymmetrical. Mark Anson, CAIA, the president of mega-manager Nuveen Investments discussed three dimensions of this asymmetry in a column for Pensions & Investments on Monday. Regular readers of this website may remember Anson as the former CIO of both CalPERs and Hermes (manager of the British Telecom pension plan among others).
Anson argues that managers have an advantage over investors when it comes to:
- knowing the true amount of beta in their funds,
- the fee structure (everyone wins when the fund is up, but only investors can lose when it’s down), and,
- information on the true risks of a particular investment strategy.
While he does not prescribe any kind of remedy, you don’t have to be a rocket scientist to figure out that managed accounts would greatly mitigate these asymmetries.
So why the debate then?
But as we have recently observed, the debate over institutional managed accounts continues. Sure, many sophisticated institutional investors are now turning to managed accounts to address age-old concerns about transparency, liquidity and fees. In fact, the new CIO of CalPERS, Joseph Dear recently reiterated the pension plan’s concerns when he told Bloomberg News this week that: More…
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[...] all about alpha One of the more enduring criticisms of the so-called “hedge fund model” has been that the relationship between manager and investor is asymmetrical. Mark Anson, CAIA, the president of mega-manager Nuveen Investments discussed three dimensions of this asymmetry in a column for Pensions & Investments on Monday. Regular readers of this website may remember Anson as the former CIO of both CalPERs and Hermes (manager of the British Telecom pension plan among others). [...]