Separately Managed Accounts up in Q1

May 21, 2002 ( - Assets held in separately managed accounts were up 3.4% during the first quarter of 2002, according to a report by the Money Management Institute (MMI).

The MMI report said assets industry wide were $413.5 billion at the end of the first quarter, up from $399.8 billion at the end of 2001. MMI data comes from a survey of member firms with separately managed account businesses and with their portfolio managers.

MMI’s quarterly assets under management (AUM) figure is based on program totals reported by Merrill Lynch, Morgan Stanley Dean Witter, UBS PaineWebber, Prudential, and Salomon Smith Barney – which collectively hold approximately 70% of the market. MMI also uses a host of smaller firms as a proxy for the remainder of the managed account business.

The MMI account universe comprises portfolios managed on behalf of both individual investors and institutions working with financial advisors, and excludes assets brought directly to money managers as well as portfolios invested in mutual fund managed account programs.

Multiple discipline products are a key element of managed account industry growth, according to an analysis recently conducted by Kevin Keefe, vice president, Financial Research Corporation (FRC).

Multiple discipline products are accounts that employ a multi-manager methodology in bringing the benefits of the managed account approach to investors with assets beginning at approximately the $100,000 level. FRC projects that sales of MDP offerings will total about $26 billion in 2002, growing to $35 billion in 2003 and $46 billion in 2004.

In a forecast released in April, FRC projected that assets held in separately managed accounts would approach $1 trillion by the year 2005 and total nearly $3 trillion by the year 2011. The total number of individual accounts, estimated at 2 million in 2002, will increase to 4.2 million in 2005, 7.9 million in 2008, and 12.5 million in 2011.

Managed accounts are individual accounts offered by financial consultants utilizing a broad range of advisory services and are usually managed by professional, independent money managers using an asset-based fee structure.