On February 28. Anello Asset Management 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.
A managed account is an investment account that is owned by an individual investor and looked after by a hired money manager.
With the uptick in investor and custodial appetite for managed accounts, Global Custodian spoke to Mark Hewlett, managing partner at Anello Asset Management to hone in on why there has been a shift in the markets.
Q: How has the managed accounts space changed over the last few years?
A: There are more players, such as ourselves coming to the market. They understand that in this era of increasing technology and transparency, you cannot deny clients complete clarity on what you are doing. Despite the popularity, pure managed accounts are still only available in the main to the $1bn+ funds. Barriers to entry to managed accounts have been brought down thanks to the platforms. Although these platforms have given investors access to managed account managers, many are based on a swap which is a lot different to a manager trading directly on the clients behalf, this increases counterparty risk and cost.
Q: Are you seeing new types of clients coming to the market?
A: Platforms have certainly increased the awareness of managed accounts and clients with $100,000 instead of $100 million to invest are taking advantage of the platforms. There’s still a lot more work to be done for the pure managed account players to increase market share in the smaller fund and family office space.
Q: While investors are seeking transparency, why are UK investors still not as active compared to other regions?
A: A cynical person would suggest it is due to the structure of the commissions and rebates paid to advisors for fund structures. This makes the introduction of RDR in 2013 the best thing for managed account managers and also gives the UK the most potential as managed accounts are underutilised and pushed to the back burner as upfront fees outweigh the clients’ best interest. The tide is slowly turning though in advance of RDR.
Q: Why is the US an important region for you to tap into and what developments do you see there?
A: Known as Commodity Trading Advisors (CTA’s) in the US, this market is well established. We had to move forward our application as demand was so strong. We knew the market was developed there but didn’t expect the response to our proposition as quickly as it happened. The advisors, FCMs and clients themselves were contacting us. We see great growth for us as a business, although as the market is so well established in the US, developments there will be more muted than elsewhere in the World.