page 140 book 3 schweser. what are seprate or pooled accounts. can someone please explain in layman language. as i am no understanding it. also schweser says “The drawback for these smaller funds is it is difficult to differntiate the performances of the seperate, pooled funds” and the manager may hold excess cash to provide liquidty for all pooled funds.
Can someone explain
What are seperate or pooled funds in layman terms
What does the statement that I put in quotation mean.
difference is provided in the professor’s note on pg 141
For a pooled account - multiple accounts being managed by the same manager are combined. For this account - it would be difficult to arrive at the performance characteristics at an single “client” level - since the combination creates issues with determination of cash drag (for whom was the cash held in the account, since the cash drag affects all the clients).
thanks cp i have one more question. when you say accounts are combined, does that mean all these accounts are uniform in the sense there could be etfs mutual funds and/or some other funds or all are basically portfolios given by insitutions to compaines to manage. basically what i am asking is what is the nature of these seperate accounts and where do they come from.
they are combined at the manager level – that is what I understand.
set of accounts each with individual strategies - but because the same manager with a “pool of funds” manages them - he could combine the funds for the process.