"After years of steadily becoming more complex and requiring hundreds of millions of startup dollars and operational and compliance know-how, there are now more avenues for getting a new fund off the ground, with the SMA serving as the most obvious change, said Kristin Kramer, Goldman Sachs' global head of capital introduction, who connects emerging hedge funds with big-money investors."
"What's changed 'the most in the past few years,' she said, is the surge in new funds launching with capital from SMAs run by larger hedge funds or institutional investors. SMAs come in different flavors depending on which large investor is providing the capital for them, but they differ from the typical hedge fund by allowing the allocator more control and access to the end manager."
"Hedge fund launches had been steadily declining until SMAs, portfolios that investors can oversee directly instead of being pooled with others, became commonplace in recent years. Last year, according to Hedge Fund Research, there were nearly 500 launches, a figure that harkens back to the pre-pandemic days, and there were 121 new funds in the first quarter of this year."
Separately managed accounts (SMAs) have proliferated, lowering barriers to launching hedge funds and driving a rise in new fund starts toward pre-pandemic levels. SMAs allow allocators direct oversight of portfolios rather than pooled commingled structures, offering daily or near-real-time portfolio and performance access compared with monthly updates. SMAs can be sponsored by large hedge funds or institutional allocators and vary by provider, giving allocators more control and access to portfolio managers. The increased SMA usage has enabled nearly 500 launches last year and 121 new funds in the first quarter, while traditional operational and compliance costs remain significant.
#separately-managed-accounts-smas #hedge-fund-launches #allocator-control-and-transparency #capital-introduction
Read at Business Insider
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