A managed account (also called “separately managed account” or “controlled account”) is an account that is owned by the investor but managed for a fee by a financial advisor. The investor gives the financial advisor the discretion to buy, sell and trade investments on behalf of the investor. An investor usually chooses among predetermined portfolios, which financial institutions sometimes package in categories such as high yield, balanced, large cap, global small cap, strategic fixed income, and other similar descriptors. The investor can usually customize the portfolio to some extent, although this is not necessarily the case with all managed accounts. A managed account is not an “excepted investment fund.” Even if the investor may select an established portfolio of investment choices, the managed account is not an excepted investment fund. In fact, the managed account is not an investment fund at all. The investor has not “pooled” the investor’s money with other investors. Although the account manager may have offered the option of selecting a predetermined “portfolio” of assets, the investor owns each of these assets individually and directly in the investor’s own name. For this reason, as well as other reasons, the investor must disclose each asset as a separate line item on the financial disclosure report. Although some managed accounts may appear similar to mutual funds, they are not mutual funds and do not qualify for the same treatment as mutual funds under conflicts of interest laws.
This guide is not intended to provide investment advice, and you should not rely on statements in this guide when making investment decisions.
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