Wednesday, July 17, 2024

Berniston Review: What to Know About Managed Accounts [berniston.com]

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A portfolio of bonds, stocks, or a mix of the two held by a single manager is known as a managed account. The investor employs a qualified investment manager to supervise the account’s activities in order to meet certain goals, including current income or long-term growth. It is a means by which an individual or institutional investor can profit from the specialized knowledge of a private investment manager. The account’s investment manager has discretionary authority, which gives him the power to decide on investments based on the owner’s needs, goals, asset size, and risk tolerance. Let’s check out Berniston’s view on this.  

Berniston’s Reveals How Does It Works

Typically, a managed account is overseen by a fiduciary, or an expert accountable for a client’s investments. Berniston describes a fiduciary as a money manager, who is often hired by their clients to oversee their financial portfolios. Money managers can make profitable account decisions without always consulting the client since organizations mandate that they follow financial legislation. To make sure the client is aware of their complete investment portfolio, managers frequently give updates to their clients on the additional investments they make.

Potential clients frequently offer to invest a minimum amount before becoming qualified to engage a money manager, depending on the company the money manager works for. On behalf of the client, the manager may make further investments in what are known as securities in order to expand the account. Berniston defines types of securities as follows:

  • Bonds
  • Mutual Funds
  • Stocks
  • Term deposits
  • IRA’s Etc.

Berniston’s View On Mutual Funds Vs. Managed Accounts

A financial professional engaged by a customer handles two sorts of portfolios: mutual funds and managed accounts. Mutual funds and managed accounts are subject to different legislation, even though they both follow regulations aimed at protecting clients’ interests. Managed accounts also have a single investor or owner. On the other hand, a mutual fund usually consists of a number of investors, each of whom owns a certain portion of the account’s value. Investors in mutual funds may also be subject to annual fees or expense ratios. These fees and ratios may be accompanied by commissions, which could impact total returns.

Pros 

  • Customized managed accounts cater to the demands of the account holder.
  • Transactions in managed accounts can be scheduled to minimize tax obligations. 
  • Managed account holders enjoy complete transparency and power over the fund’s assets.

Cons

  • Moreover, six-figure payments are needed for managed accounts.
  • It may take days to invest or distribute funds from a regulated account.
  • An annual fee that can impact net return is paid to managed portfolio managers.

Wrap Up

Due to the constantly shifting nature of the markets in which these accounts are invested, professional money managers actively monitor these accounts. In order to meet specific risks, goals, and client requirements, managed accounts are tailored. Investment and return goals are taken into consideration while managing mutual funds on behalf of other fund holders. To learn more about investment-related topics, follow Berniston’s website today.

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Alena Sakak
Alena Sakak
Alena Sakak is a passionate wordsmith and puzzle enthusiast. With a love for language and a knack for problem-solving, Alena enjoys diving into the world of crosswords, finding solace in the daily challenge of the NYT Mini Crossword. When not unraveling word puzzles, Alena can be found exploring new books or indulging in creative writing endeavors. Join Alena on a journey through the world of words and puzzles.

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