Do you work for an investment manager that doesn’t seem to have any criteria around when to offer a client a segregated account? Here is a short Q&A that will help you develop your internal approach!

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Q: When would an investment manager be appointed to manage a segregated account?

A: When the assets are of a sufficient scale to achieve diversification, match investment returns with administrative expenses, and generally warrant the extra costs of running a segregated account.

Q: How do firms decide when to offer a segregated account?

A: Different firm have different approaches to this, however on average most firms will look at annual revenue, assets under management (AUM) or both. In other words, the portfolio should  generate sufficient revenue and be of sufficient size to warrant the costs of running a segregated account.

Q: What revenue and/or AUM amounts do firms set?

A: In our experience, the more established firms use an annual revenue amount of £100,000 or AUM amount of £100 million. However, there are always exceptions! The smallest segregated account we’ve worked on was for £7 million, and some firms have a minimum AUM of £500 million.

Should you require any further advice or information on segregated accounts, Cleveland & Co, your external in-house counsel, are here to help.