According to the Money Management Institute, from June 30, 2009, to June 30, 2010, "managed solutions" assets rose more than 27 percent, to over $1.75 trillion. The S&P 500 and the Russell 2000 indexes were up 14 percent and 21 percent, respectively, in those 12 months so managed solutions are growing faster than the U.S. stock indexes are appreciating. That indicates investors are pouring in billions of dollars.
Managed solutions, also called managed accounts, are fee-based investment programs. Investors pay their advisor a fixed fee–usually about 1 percent of assets per year–to design and implement a portfolio. There are no extra sales charges so investors don’t have to worry about paying sales commissions on unnecessary trades.
What’s more, managed accounts often offer investors access to highly-regarded money managers. Some top stockpickers won’t work with a client unless he or she has at least $1 million (or even $5 million) to invest. However, a brokerage firm may aggregate contributions from many clients to meet the money manager’s required minimum. At some brokers, investors can participate in managed accounts with investments of $250,000 or more.
With managed accounts, each investor owns the individual stocks, not just shares of a fund. Therefore, investors have more flexibility than they would have with a mutual fund. An investor can decide not to own, say, tobacco stocks or an investor can sell selected stocks to harvest tax losses, when that becomes desirable.
