Outsourced Chief Investment Officers (OCIOs)

As a consultant and trusted adviser, you work hard to generate positive returns for your asset owner clients. Exposure to uncorrelated returns through large asset mandates may be an important part of your strategy, but along with these come important systems and governance to meet committee and board requirements. These groups may also demand you increase investment transparency and reduce fees. Additionally, you may be seeking a structure to help your organization manage multiple smaller clients with less cost and strain on your internal operational resources.

So how do you deploy your complex investment strategies and meet all these obligations in a cost-effective, operationally efficient way? Ultimus’ Dedicated Managed Account (DMA) is a beneficial solution. This structure provides the exact controls, services, and reporting required to manage investments in a cost-efficient and scalable way.

A Flexible Structure to Help You Reduce Costs & Meet Investor Demands

A DMA helps you meet your objectives to reduce costs, improve overall returns, and meet investor demands for liquidity, control, transparency, and oversight. Importantly, a DMA also provides you the flexibility to negotiate strategy customization, investment guidelines, and management and performance fees with each underlying fund manager. Additionally, a DMA improves internal efficiencies and reduces costs associated with the operational requirements of managing direct investments.

Through a DMA, the asset owner is the sole investor, with full ownership and control over the account. As the OCIO, you select preferred trading advisers, custodians, Prime Brokers (PBs) / Futures Commission Merchants (FCMs), and other service providers, and delegate daily management of the account to an appointed manager. You or your institutional client and each underlying fund are linked together only through an Investment Management Agreement. This structure provides the exact controls, services, and granular reporting needed to make more informed investment decisions.

The DMA Structure

Ultimus’ comprehensive DMA solution provides:

Solution Structuring

Before you sign as a client with Ultimus, we thoroughly review with you our DMA structuring options – co-mingled managed accounts or separate, segregated LLCs with managers. You ultimately determine, with the guidance of your legal counsel, the structure that best suits your requirements.

Legal Document Support

We provide templates for legal documents, which allow you to see how investment management agreements can be drafted, along with the investment company documents. Please note: we do not provide legal advice, only examples of documents, you should consult with your own legal counsel for the preparation our legal documents.

Account Opening Coordination

Once you have selected your custodian / Prime Broker (PB) / Futures Commissions Merchant (FCM) and managers, we coordinate the opening of your accounts by completing the applications for your signature, gathering all the required information, testing connectivity and requirements, and more. We are not, however, a party to the agreements.

Operational Control Environment

We provide the operational infrastructure for your DMA by utilizing our administration teams and technology. We utilize current technology to collect trade data, reconcile to custodian/PB/FCM, value the portfolio, and calculate portfolio performance.

Guideline Monitoring

When you become an Ultimus DMA client, we coordinate with you to determine the specific guidelines by which you wish to monitor your managers. After receiving this direction from you, we utilize an internal, proprietary database to perform guideline monitoring, which is provided on a T+1 basis, not ex-ante.

Risk Monitoring

We provide our DMA clients with standard risk measures on individual managers including Value at Risk (VaR) analysis, stress testing, and scenario analysis. We conduct scenario analysis on existing holdings, not on an ex-ante basis, with pre-defined scenarios (such as 9/11, ‘87 market crash, and flash crash), but you may also request other scenarios. Stress testing is completed on pre-determined factors including a percentage move in markets and volatility. All reporting is provided on existing holdings and on a T+1 basis.

Performance/Risk/Guideline Reporting

We provide you reporting on a daily basis through a variety of delivery methods. Our proprietary daily reporting package includes PDFs that summarize performance, risk, and guideline analytics. We also have a proprietary portal that allows you to see daily balances, exposures, and performance.

Customized Reporting

Our technology is seamlessly integrated between our DMA platform and administration services, thus allowing us to offer you robust and powerful data that can customized to your exact needs.

Please contact us today for more information about Ultimus’ DMA offering and whether it’s right for your fund.