Managed Account Platform Trends
In recent months, BHA analysts have noticed that more and more European investors have mentioned changing their investment policies and specifying that allocations can be made to only hedge funds registered on managed account platforms. One such platform that is popular with these investors is Lyxor.
Started in 1999, Lyxor has been building its base of investors and hedge funds for a decade. In 2009, Lyxor saw inflows of $4.5 billion, an impressive number considering the fact that the platform had $29 billion in assets under management and the number of registered hedge funds decreased from 150 to 110.1
The main benefit of investing in funds on managed account platforms is less due diligence. Funds are rigorously vetted by professional and experienced analysts, reducing the amount of time and effort investors must spend researching. For example, funds registered on Lyxor are evaluated and approved by analysts at Societe Generale Asset Management.
Additionally, managed account platforms offer investors a high degree of liquidity and transparency. Given that these are investors’ current preferences, it is logical that more and more investors have begun investing with fund managers on a platform.
At the moment, the Lyxor Platform seems to have first-mover advantage in Europe: it was the continent’s first platform and now is the oldest. A European-based fund of funds mentioned that although it would look at other direct funds, it gives funds on the Lyxor Platform higher consideration and would meet with any registered fund. BHA expects this will change as more investment banks realize the opportunity and create managed account platforms.
Heading into 2010, it is important for fund managers to asses their fund offerings and consider changes that will make their products compelling. Considering what investors have been through in the past two years—funds’ refusal to make redemptions, funds’ poor disclosure of information and, in some cases, fraud—it is likely that managed accounts will be popular for some time to come. Offering managed accounts and registering with a managed account platform may be one way—and a necessary way—to compete.
1 Hedge Funds Review, “Hedge Funds Review 2009 European Fund of Hedge Funds Awards,” November 26, 2009,