Individual stocks and bonds managed portfolios
This guide provides the essential, practical information you need to know about professionally managed portfolios of individual stocks and bonds.
This guide examines the special features of this increasingly popular way to invest and explores the complementary roles your financial adviser and investment managers play in helping you meet your financial goals.
managed accounts
investment expertise and financial advice can be a dynamic duo.
A managed account is a portfolio of stocks, bonds, or a combination of stocks and bonds chosen by a professional investment manager to achieve a specific objective, such as long-term growth or current income. Each account—and its individual investments—is owned by the investor for whom it is managed. In other words, a managed account is a way for an individual or institution to benefit from the professional expertise of a private investment manager.
Each client account is one of hundreds of accounts that the manager oversees. All of these accounts within a particular discipline generally share the same objective and include many of the same securities. For example, when the manager decides it’s time to sell a stock or bond or buy a new security, that transaction may well be made for many—and sometimes all—of the accounts simultaneously.
But the accounts an individual manager oversees are rarely identical. Because each account is individually owned, the owner may request that the portfolio include or exclude a particular security or securities, or that some holdings be sold to produce capital gains or losses.
While extensive instructions from an individual account owner may interfere with the investment manager’s ability to achieve that investor’s goals, providing owners the autonomy to make certain decisions is clear evidence of the value that investment managers place on serving each client’s needs.
managed account basics
a managed account is a handy tool for investing your assets.
Managed accounts attract investors who may be uncertain about which securities to choose for their portfolios, how long to hold onto the securities they have, and when to sell. That’s because, in a managed account, those decisions are made by a professional investment manager, as they are in a mutual fund. In fact, the manager monitors the portfolio continuously to stay on top of new opportunities.
And like a mutual fund, each managed account has a clearly defined objective. That’s an added enhancement for people who recognize the importance of goal-oriented investment decisions.
An official objective also allows investors to identify a benchmark against which to judge progress toward their goals—or react to lack of progress. That benchmark might be a well-known stock market index, such as the Standard & Poor’s 500-Stock Index (S&P 500) or a personalized standard defined with the help of a fainancial adviser to reflect the investor’s goals and objectives. Some industry experts describe such a personalized benchmark as a family index.