Family Office
F-Squared and Smartleaf link up for overlay SMAs
Alpha-Cycle accounts convert fund indexes to individual-security
portfolios. F-Squared Investments, a manager of indexed
investments that blend active and passive approaches, and
overlay-management technology provider Smartleaf have teamed up
create separately managed accounts (SMAs) based on F-Squared's
mutual-fund indexes.
SMAs are customizable portfolios made up of individual
securities.
Reverse engineering
But Wellesley, Mass.-based F-Squared says it can convert its
indexes into "a highly correlated tracking portfolio of
individual stocks" using its "proprietary replication
technology." These portfolios are designed to provide more
consistent returns with reduced likelihood of significant
underperformance.
And F-Squared says its new AlphaCycle SMAs are available for a
third to a half the cost of traditional SMA manager fees, that is
from 26 basis points to 40 basis points -- which implies a fee to
the end investor of between 1.25% and 1.50% of account
assets.
F-Squared's 18 ActiFindexes track actively managed mutual funds
with histories "of delivering superior, sustainable investment
performance," according to an F-Squared press release.
ActiFindexes -- formulated and supervised by investment
consultants Kanon Bloch Carre, Klein Decisions and Mesirow
Financial -- are supposed to integrate "multi-manager
diversification, and a strict sell discipline" with the result
that advisors and retail investors get "the consistency,
discipline and performance that has typically been reserved for
the institutional investment community."
F-Squared will manage its AlphaCycle models using Cambridge,
mass.-based Smartleaf's overlay technology. That allows for
security-level customization and active tax management.
At a higher fee, the models can be blended to form
Smartleaf-enabled unified managed accounts, according to
F-Squared.
"In a real sense, we have created a true virtual investment
vehicle," says F-Squared's CEO Howard Present. We are excited
about what this brings to the advisor market." -FWR
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