Investing in managed accounts

When you invest in a managed account, you purchase a portfolio of equity or fixed-income securities or mutual funds and gain access to the expertise of a professional investment manager. The account's manager oversees choosing and trading the securities in your portfolio and others like it.

Like mutual funds, each managed account has a specific investment objective, such as long-term growth or current income, letting you choose one — or more — to suit your own investment goals. Similarly, like their mutual fund counterparts, managers follow a particular investing style. For example, some equity portfolios are invested for growth, while others are invested for value.

Similar, not identical

Unlike an investor in a mutual fund, however, as a managed account holder you own securities directly. That means you actually buy shares of Company A and shares of Company B, and so on, rather than shares in a fund that in turn owns shares of Companies A and B.

You also have some freedom to customize your managed account portfolio, which you don't with a mutual fund. You might choose not to own one or two stocks or bonds from your investment manager's model portfolio, for example — or you might request that a certain stock or bond be added to your portfolio.