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Diversification
Managed accounts have attracted billions of dollars
in new investments over the last few years. Like mutual funds, managed accounts offer
diversification
in a single package. The manager invests the pooled assets of
all the accountholders in a range of different securities suited
to the account's investment objective.
While the typical managed account may own fewer
securities than a mutual fund with a comparable objective, the
portfolio is likely to be significantly more varied than what
you could achieve investing the same amount of capital on your
own. What's more, the trading costs are typically less because
the manager buys in large quantities and then allocates the shares
proportionally to the accounts he or she controls.
Your managed account in context
In many cases, a managed account — or several
managed accounts with different objectives — will be just
part of your overall portfolio. In that case, choosing an account
that focuses on international equities or long-term
corporate
bonds
is really an asset-allocation decision —
and you delegate the task of diversifying that component of your
portfolio to the experts.
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