NEW YORK--(BUSINESS WIRE)--2008 was a notorious year for hedge funds with negative absolute performance, liquidity problems, style drift and manager fraud. As a result, investors are demanding more control, transparency, liquidity, due diligence and in some cases, customization. They want a safer way to invest with hedge funds.

Against this backdrop, managed account platforms are being set up and further developed to respond to clients’ needs. Banking groups, asset management groups, funds of funds, independent stand-alone organizations and service providers are the most active groups developing platforms.

Estimates are that about 20 platforms now exist, representing about $30-50 billion. Only a handful of these are over $1 billion in assets under management. With hedge fund industry assets estimated at about $1.3 trillion, platforms represent only about 2-4% of the industry assets, at most. The largest include:

Platform		Estimated Assets ($B)
Lyxor		9.5
Deutsche Bank		4.0
AlphaMetrix		2.3
Lighthouse Investment Partners		2.0
HFR Asset Mgt		2.0
Innocap		1.8
Credit Agricole Structured Asset Management		1.6

Many expect this amount to grow. Some investors say they won’t invest in hedge funds that don’t address transparency, liquidity and control issues. Furthermore, some major large funds of funds have publicly said they are or plan to transfer a good amount of their assets into managed accounts. Since the start of 2009, various platforms have observed extremely high growth and asset flows.

Challenges still exist for managed account platforms: Perceived quality of managers on the platform, liquidity problems during crisis periods, tracking error, operational difficulties, potential conflicts of interest and added fees.

Lois Peltz, president of Infovest21 and author of the report, said: “Despite these challenges, the platforms have been making significant progress to overcome these problems. More top managers are open to running managed accounts, larger allocators are looking for their own client dedicated funds and some massive multi-billion new platforms will soon enter the market.”

Many hedge fund specialists concur that managed accounts will be an increasingly part of the hedge fund industry, projecting that platforms will represent 15-20% of total hedge fund assets over the next few years.

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Report includes:

• Managed account platforms – what they are
• How they differ from other structures
• Advantages and disadvantages
• Size/growth potential
• “Buy versus rent” considerations
• Overview of specific platforms
• Challenges

Infovest21
Lois Peltz, 212-686-6440
lpeltz@infovest21.com