Managed money vs. mutual fund
What are some weaknesses of managed money (seperate managed accounts)?
depends on the SMA
you mainly want to look at it soley from a cost standpoint. considering # of transactions, and the types of investments they are wanting to buy. very broad question.
A few weaknesses of managed money:
1. High investment minimums
2. Very difficult to get proper diversification with less that 1 million.
3. Large 10-99 at end of year
4. Client sees individual stock holdings on statements which leads to "why do I own a dog like PFE?"
5. MM is meant for high net worth individuals that want control of their holdings (old stock they are married to). Unfortunately, less that 8% of clients actually use this.
6. high expense for first 500k to 1 million
7. Managers usually have a much shorter track record that many mutual fund managers.
I use both Managed accounts and mutual funds, but I've found that best of breed C-share funds are less expensive for the client and raise less questions about performance and fees that separately managed accounts.
Why would someone with over $1m pay fees in a mutual fund and then pay you another fee to manage it? For that type of money they customer will pay less expenses and have more control with SMAs.