How do separately managed account programs differ from mutual funds?
Mutual funds pool your money and invest in stocks, bonds and other securities on behalf of all the individual shareholders, who have similar investment or financial goals. The shareholders jointly own the fund’s investments, and each share represents an equal percentage of ownership in the fund’s assets. The fund’s share price is the market value of the securities held – less any fees, expenses, and liabilities incurred by the fund – divided by the total number of shares. The cost of a mutual fund can vary considerably depending on its investment type (equity, fixed income or international securities) and structure (load or no-load). However, when estimating the cost of a mutual fund, you need to consider transaction costs, custody fees, distribution and marketing costs and service fees for the fund manager. Separately managed account portfolios, in contrast, are separate securities personally owned by individual investors.
