The New Managed Account Solutions Handbook - Vocabulary Flashcards

Vocabulary flashcards covering key terms, concepts, and people from The New Managed Account Solutions Handbook.

MAS (Managed Account Solutions)

A comprehensive platform combining SMAs, mutual funds, ETFs, and other investments to manage client portfolios, emphasize recurring fee-based revenues, and leverage advanced technology.

SMA (Separately Managed Account)

An account that holds individual securities managed for a single client with customization, tax management, and reporting; historically higher minimums.

UMA (Unified Managed Account)

A single custodial account that houses multiple investment products (SMAs, mutual funds, ETFs, etc.) coordinated by an overlay management system.

MDA (Multidiscipline Account)

An account structure that includes multiple investment strategies within one client account to enhance diversification.

Overlay Portfolio Management (OPM)

Coordination of multiple investment components in a UMA using active, passive, or hybrid overlay managers to optimize diversification, tax management, and rebalancing.

MMI (Money Management Institute)

Industry association representing MAS providers and promoting the growth and standardization of managed account solutions.

IPS (Investment Policy Statement)

A document outlining a client’s goals, risk tolerance, time horizon, asset allocation, and guidelines for investment decisions.

Tully Commission

SEC study (1995) that supported asset-based fees over trade-based commissions and helped promote fee-based financial planning.

ETF (Exchange-Traded Fund)

A low-cost, tax-efficient security that tracks an index and trades like a stock; aids diversification within MAS.

Alpha

The portion of return above what is explained by beta; a measure of manager-added value.

Beta

A measure of a portfolio’s volatility relative to a benchmark; beta > 1 implies higher volatility.

R-squared

A statistic indicating how closely a portfolio’s returns track its benchmark; higher values imply closer tracking.

Sharpe Ratio

A risk-adjusted performance measure: excess return per unit of total risk (standard deviation).

Sortino Ratio

Similar to Sharpe but uses downside risk; measures return per unit of downside risk.

Treynor Ratio

Risk-adjusted return per unit of market risk (beta).

Hurdle Rate

A benchmark threshold that must be exceeded before performance fees are earned by a fund manager.

High-Water Mark

A rule requiring a manager to recover prior losses before charging performance fees again.

UMH (Unified Managed Household)

Concept expanding UMAs across an entire household to coordinate investments, taxes, and reporting at the household level.

Asset Classes in MAS

Categories used in MAS such as Domestic Equity, International Equity, Fixed Income, REITs, Commodities, and Alternatives.

Due Diligence on Managers

Systematic evaluation of a manager’s track record, process, team, and controls before adding them to an approved list.

Asset Allocation

The process of distributing investments across asset classes to balance risk and return.

Investment Policy Statement (IPS) Components

Includes goals, time horizon, risk tolerance, asset allocation ranges, tax considerations, and responsibilities.