Despite their superior transparency and liquidity, managed accounts may have certain drawbacks compared to pooled vehicles:
- Access: Certain strategies and investment products are only available to institutional accounts or accounts meeting minimum size thresholds. Investors who are not institutions or who have small accounts with Cable Car may not be able to participate in opportunities they could otherwise access through pooled vehicles.
- Transaction costs: New accounts must purchase or sell shares in order to match the target portfolio. When opening or closing an account, clients may incur higher per-share commissions to open or close positions than for ongoing trading activity, where commissions are spread over more accounts.
- Trade allocation: Due to market conditions, suitability considerations, and rounding, it may not always be possible to allocate every investment opportunity equally to all client accounts. Cable Car attempts to balance trade allocations fairly over time and does not systematically favor any particular account or group of accounts. However, performance across client accounts may diverge, unlike a pooled vehicle in which all interests are proportional.
Posted in: Managed accounts