Like traditional offshore hedge fund structures the offshore SPC (Segregated Portfolio Company) is usually established in a traditional offshore jurisdiction like the Cayman Islands or the British Virgin Islands. Other offshore jurisdictions include: Anguilla, Jersey and the Isle of Man.
A segregated account is an individual portfolio of securities held at a custodian. Importantly, the client is still invested in the fund vehicle of the underlying hedge funds (as opposed to a “managed account”) and can still be anonymous vis-à-vis the hedge funds, as these are bought/sold using a nominee name. The investment manager is then given the right to trade relevant securities on behalf of the client.
When re-thinking their investment method, long-term investors should consider the benefits of segregated account investing:
- Customised, complementary hedge fund exposure Through a comprehensive dialogue, the client’s portfolio is created such that it is designed to add-value in the context of the client’s overall portfolio. What is produced is not ‘standard’ but instead a dedicated investment solution. Individual clients will have individual concerns and requirements; in general, the elements that investors will most likely focus on are: risk appetite/tolerance, exposure preferences, liquidity requirements, and elimination of heightened indirect exposure.
- Portfolio evolution Clients benefit from holding a dynamic portfolio that evolves in response to market cycles and as part of overall portfolio progress. Importantly, this evolution of exposure always takes into account the clients’ individual requirements. As clients’ comfort with the investment style increases, they can take the opportunity to change the risk appetite within their portfolio, to create a core-satellite approach to hedge fund investing, and to truly integrate their long-only investments with their portfolio of hedge funds.
- Transparency Clients take confidence in knowing the exact names and types of exposure which comprise their portfolio. This is achieved by giving a detailed outline of each individual hedge fund position as well as detailed attribution and contribution analyses. To ensure even deeper knowledge and to inspire further confidence, clients can also benefit from meeting managers with whom their portfolio is invested.
SPC or SPV (Special Purpose Vehicle) funds plays an important role in the FX world, whilst the managed account provides the foundation for the trading sometimes more astute or institutional investors require slightly different structures for asset protection.
The minimum investment is dependent on the management firm and in most cases can be larger than managed accounts, in some cases it can be as little as 50,000 USD/EUR or as much as 5,000,000 USD/EUR
To find out how to get the same results from one of our leading managed accounts, yet have your capital segregated in a different manner please contact us.
