Two of fund management company Anello Asset Management’s partners has revealed that the number of institutional investors, ranging from pension funds, sovereign wealth funds, hedge funds and fund of funds that are adopting or looking into managed accounts are surging, after the Ponzi scheme scandal by Bernard Madoff have driven them to manage their money in a more transparent way.
“Institutional investors in Germany and Switzerland have always been the most active users of managed accounts,” says Mark Hewlett, partner at Anello. “However, following the Madoff scandal, we have seen a drive for more transparency, whether that is across the custodian, fund of fund, pensions and private wealth management spectrum. Even hedge funds are calling for us to use managed accounts within their portfolios.”
In June 2009, Bernard Madoff was sentenced to 150 years in prison, after his Ponzi scheme, that he began in the early 1990’s left investors short of $65 billion.
A managed account is an investment account that is owned by an individual investor and looked after by a hired money manager.
“Managed accounts are attractive to investors because they are able to see where their money is, how it’s performing whenever they want,” says Hewlett. “The fund industry has previously been a very closed shop and quite secretive and the shielding of transaction costs and trading practices have been the elephant in the room, for too long. With managed accounts, investors are able to keep track of their investments.”
On February 28. Anello unveiled its successful registration with the US authorities, such as Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA), in order to deliver managed account services in the US.
Having established the business for the UK market in 2009 and subsequent Financial Services Authority (FSA) approval in 2010, Anello says that the US is a key area it is looking to expand in.
“I’m very pleased that we are now able to market in the US at this early stage of our development,” says Amit Mehta, Partner, Anello Asset Management. “We have ambitious expansion plans – to hire the very best industry professionals in our space, launch further programmes and make Anello AM the first port of call for investors looking to utilise managed accounts to generate absolute returns.
All companies wishing to trade in the US must be registered with the US regulator for the commodities futures and option markets CFTC before they can become active in this market.
The NFA is the industry wide, self-regulatory organization for the US futures industry and approval is a mandatory requirement for businesses wishing to trade the US futures exchanges.
The firm, which focuses on providing professional investors with returns via systematic trading of the major spot foreign exchange and global futures markets, says that an increase n US-based client demand has driven the group to expand in North America and subsequently expand its product offerings.
While Anello say that since November 2010, it has been “inundated” with calls from US investors wanting to invest in its managed accounts, Hewlett and Mehta say that in less than a week, they have been seeing a surge in the amount of enquiries for its US managed account services.
“Since the official announcement of our registration with the US regulators, we have seen many new clients approaching us,” says Hewlett. “These clients span across Europe and some in the US.”