Tag Archives: options

Sponsors Scout Buying Options within SMAs



A little-used and relatively obscure investing strategy – buying options within a separately managed account – has made a bit of a stir in recent months, with a spike in product development talks between asset managers and platform sponsors, mostly for the strategy’s potential to address advisor and client concerns about market volatility.

The technique of using options in SMAs has been around for a while, primarily as a specialty aimed at generating returns through option-writing expertise, or to help clients with large concentrated positions hedge their portfolios. The new strain of product inquiries, however, is looking at how options might help advisors address a major concern of the last few years: lessening the shock and distress clients feel when the markets shimmy and shake in all directions.

“We’re seeing more demand in the last year or so, maybe even in a shorter timeframe,” says Patty Loepker, director of externally managed SMA and institutional products at Wells Fargo Advisors, who is chairing the Money Management Institute’s conference this week in Chicago. “More advisors are calling and asking for strategies, and we’re seeing more demand for managers that offer it.” Continue reading

“Agency-Only Execution Firm” To Seed Hedge Fund Clients

Cantor Fitzgerald, the “broker’s broker” that literally rose from the ashes of 9/11 to rebuild its business trafficking in multiple product types, including ETFs and options, and positions itself as an “agency-only” aka “conflict-free” broker, today announced the second phase of its plan to expand into the [often-conflicted] territory of hedge-fund seeding.

As reported by FINAlternatives,

Cantor hopes to raise $1.25 billion for their hedge fund seeding business, and the first tranche could provide between $25 million and $50 million to upwards of 25 emerging managers.

Cantor, which by virtue of its gargantuan global footprint, often finds itself not only standing in between captive buyers and sellers, but has occasionally been embroiled in issues that strike at the epicenter of the famous  Chinese Wall.  However much the strategy of a broker providing trading capital to its customers might seem to present potential conflicts with regard to the firm’s  “agency-only execution” model, one source who is not authorized by his firm to publicly comment, suggested “..industry watchers are confident that Cantor will always do the right thing..” Link to the full story by clicking on the FINAlternatives log.