What is a Multi-Discipline Account
A multi-discipline account is a type of managed investment account accessible by multiple investment managers with different specializations.
Breaking Down Multi-Discipline Account
A multi-discipline account, also known as a multi-style or multi-strategy account, comprises several sub-accounts, each run by a manager with the relevant expertise. The multi-discipline account provides investors with an efficient means to a diversified, professionally managed portfolio.
Multi-discipline accounts exist to achieve a diversified portfolio without maintaining multiple separately managed accounts, which can be impractical. A typical minimum amount necessary to invest in a conventional managed account is $100,000. For a multi-discipline account, it might be as low as $10,000 or as high as $150,000. An investor seeking to divide their assets among four separate strategies, for example, large-cap growth, large-cap value, international growth and dividend strategy, may find account minimums frustrating. The investor would need at least $400,000, and that assumes a plan to divide assets equally among all four strategies. Compare that to the option of a single, multi-discipline account encompassing four sub-accounts. It requires less money to start and allows the investor to split assets asymmetrically.
Like a separately managed account, and unlike a mutual fund, a multi-discipline account allows the investor take advantage of the specific-shares method, as each lot of shares purchased comes with in an individual cost basis.
Why Even Affluent Investors Should Consider Multi-Discipline Accounts
Separately managed accounts have become popular among high net worth investors looking for an instrument with more individual attention than comes with a mutual fund. A separately managed account gives an individual retail investor the benefit of customized portfolio management, something a pooled vehicle such as a mutual fund cannot offer.
A high net worth investor may have no problem meeting the investment minimums necessary to set up multiple separately managed accounts to maintain a diversified portfolio, but that doesn’t render the virtues of a multi-discipline account moot. Whatever their investment minimums, multiple separately managed accounts come with the confusion inherent in chopping up a portfolio among multiple managers with no coordination. This confusion can mean having shares of the same stock in different accounts or in one account selling the stock that another account is buying. Further, with multiple separately managed accounts, it is more of a chore to determine exactly how an investor’s portfolio is performing overall.
Multi-discipline accounts also employ a separate manager for each sub-account, but overseeing the entire portfolio is an overlay manager who can ensure consistent asset allocation and coordinate the overall investment strategy. At the same time, the performance reporting is streamlined.