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Accessing Alternatives in a UMA

FinTech Revolutionizing Managed Accounts – Part 3

Hedge funds have long been mired of the world of Regulation D private placements, until now.  While several strategies fit well into the idea of yearlong lock ups, consolidated asset pools, and high fee structures, many alternative strategies operate in the everyday world of buying and selling publicly traded equities.  If these underlying equities are electronically traded, listed, and priced each second, then why the need for a private investment fund?  The answer has historically been a lack of infrastructure to efficiently offer SMAs and the inability to effectively execute a long/short investment strategy in any other vehicle.

SMArtXChange has created a proprietary technology that facilitates the real-time model delivery of a hedge fund trading strategy directly into client brokerage accounts.  By working with the hedge fund managers to open their strategy up to a prospective investor pool that dwarfs the entire hedge fund industry, SMArtXChange gives advisors the option to easily access these alternative investment strategies, and combine them with traditional strategies, in a single UMA account.

The UMA structure removes the limitations of a private placement and 1940 Act alternative product, producing an investment strategy that is allowed to operate as the Portfolio Manager envisioned, with the complete freedom to buy and sell securities, and implement leverage.  While often regarded as a riskier investment option, strategies that utilize leverage and short selling have historically illustrated the ability to lower portfolio volatility, while generating an annual return above the S&P 500 TR. Contact us for a sample illustration of how a combined traditional and alternative portfolio, utilizing leverage, outperforms the S&P 500 TR by about 85% with about 25% less volatility over the last 10 years.