Managed accounts refer to a financial arrangement where an individual or entity entrusts the management of their investment portfolio to a professional financial advisor or money manager. They come in various forms, such as separately managed accounts (SMAs), discretionary accounts, or advisory accounts.

The key functions and characteristics of managed accounts include:

1. Professional Management: Managed accounts are designed to provide investors with access to professional investment management expertise. Financial advisors or money managers make investment decisions on behalf of the account holder based on the investor's financial goals, risk tolerance, and investment objectives.
2. Customization: Managed accounts are tailored to meet the specific needs and objectives of each investor. The portfolio manager creates an investment strategy that aligns with the client's financial goals, risk tolerance, and time horizon. This level of customization allows for a more personalized approach to investing.
3. Diversification: Portfolio managers aim to diversify the investments within the managed account to spread risk and optimize returns. Diversification may involve investing in various asset classes, such as stocks, bonds, real estate, and alternative investments.
4. Active Management: Money managers actively monitor and adjust the portfolio holdings as market conditions change or as the investor's goals evolve. This active management is intended to seize opportunities and mitigate risks in the market.
5. Transparency: Investors typically receive regular statements and reports that provide insight into the performance and holdings of their managed account. This transparency allows investors to stay informed about their investments.
6. Risk Management: Portfolio managers aim to manage risk according to the investor's risk tolerance. They may employ various strategies, such as asset allocation and risk management techniques, to achieve this objective.
7. Tax Efficiency: Managed accounts may include tax-efficient strategies to help minimize tax liabilities. This can involve tax-loss harvesting, capital gains management, and other tax-planning techniques.
8. Access to Expertise: Managed account investors benefit from the knowledge and experience of professional money managers who are well-versed in financial markets and investment strategies.
9. Investment Minimums: Managed accounts may have minimum investment requirements, which can vary depending on the provider and the type of account. These minimums help ensure that the investor's portfolio can be effectively managed.
10. Fees: Managed accounts typically involve management fees, which are a percentage of the assets under management (AUM). These fees cover the cost of professional management and may vary depending on the complexity of the portfolio and the level of service provided.

Managed accounts can be an attractive option for individuals and institutions for several reasons:

1. Professional Management: One of the primary benefits of managed accounts is that they are professionally managed by experienced investment professionals or portfolio managers. These experts make investment decisions on behalf of the account holder, taking into consideration their financial goals, risk tolerance, and investment objectives.
2. Customization: Managed accounts can be tailored to meet the specific needs and goals of the account holder. Portfolio managers can adjust the asset allocation, investment strategy, and risk level based on the individual's preferences and changing circumstances.
3. Diversification: Managed accounts typically offer a higher level of diversification compared to individual stock or bond investments. Portfolio managers can spread investments across various asset classes, sectors, and geographic regions to reduce risk and enhance returns.
4. Transparency: Account holders usually receive regular statements and reports detailing their account's performance, holdings, and transactions. This transparency allows investors to stay informed about their investments and make informed decisions.
5. Access to Expertise: Managed account providers often have access to in-depth research, market analysis, and investment tools that may not be available to individual investors. This can lead to better investment decisions and potentially higher returns.
6. Active Management: Portfolio managers actively monitor and adjust the investments within managed accounts in response to changing market conditions, economic trends, and other factors. This active management can help account holders adapt to evolving market dynamics.
7. Risk Management: Professional portfolio managers aim to mitigate risk by implementing diversification strategies, setting stop-loss orders, and actively managing asset allocation. This can help protect the account from significant losses during market downturns.
8. Tax Efficiency: Managed accounts may offer tax advantages, such as tax-loss harvesting, which can help minimize tax liabilities and improve after-tax returns.
9. Time Savings: For individuals who lack the time or expertise to manage their investments actively, a managed account can provide a hands-off approach to investing. This allows account holders to focus on other aspects of their lives without worrying about day-to-day investment decisions.
10. Fee Structure: Managed accounts often have a fee structure that is transparent and based on the assets under management (AUM). This fee model aligns the interests of the portfolio manager with those of the account holder, as the manager's compensation is tied to the account's performance.

Overall, managed accounts are designed to provide investors with a convenient and professional way to grow their wealth while aligning their investments with their financial goals and risk tolerance.

In Arcane Investment, we have skilled portfolio managers with years of experience who can aid your investment strategy in meeting your financial objectives.