Once an allocator has chosen a managed-futures programme, a second decision follows: how to hold it. The two main routes, a separately managed account and a pooled fund, give access to the same trading approach but divide ownership, risk, information and administrative work differently. This guide compares them point by point.
Two ways to hold a programme
In a pooled fund, the allocator subscribes for shares, units or limited partnership interests in a vehicle. The vehicle owns the trading account and its assets. A commodity pool operator or fund manager runs it, an administrator calculates its net asset value and an auditor reports on its financial statements. The allocator's relationship is with the fund.
In a separately managed account, the allocator opens a futures account in its own name at a futures commission merchant (FCM) and grants the manager limited trading authority, usually through an advisory agreement and a power of attorney. The manager places orders. The allocator owns the account, the cash and the positions.
Ownership and control
An SMA keeps control of cash with its owner. The allocator decides where excess collateral sits, which FCM carries the account within the manager's operational requirements, and when to revoke trading authority. Ending the mandate is a matter of instruction under the agreement, not of a redemption request. In a fund, those decisions belong to the fund's governing body and service providers, and the investor's rights are those written into the offering documents.
Transparency and reporting
The SMA owner receives daily statements from the FCM showing every position, trade and balance. That supports independent risk monitoring, aggregation of exposure across managers and reconciliation to the allocator's own books. Fund investors typically receive a monthly net asset value, a manager letter and periodic risk reports; position-level detail depends on what the manager agrees to provide. Our page on vehicle structures sets out the forms Gnosis covers.
Liquidity and exit
Futures SMAs frequently carry no lockup. The owner instructs the manager to close positions, settles obligations and withdraws cash, subject to the agreement and to market conditions. Funds deal on a schedule. Private commodity pools often offer monthly or quarterly redemptions with notice and may apply gates or suspensions under stress. The UCITS Directive generally requires dealing prices to be published at least twice a month, one reason some managers run a UCITS version of a programme alongside the flagship. [1]
Liability and risk of loss
This is the difference most often understated. A fund investor's loss is normally limited to the amount invested, because the investor holds an interest in a separate legal entity. The owner of an SMA is directly liable for the account. In an extreme market move, losses may exceed the cash deposited, and the FCM may call for additional margin at short notice. [2] Partial funding, where the account trades at a nominal size above the cash held, magnifies that exposure. Understanding CTA Managed Accounts works through the arithmetic.
Minimums and replication
A diversified programme needs an account large enough to hold proportionate positions in each contract it trades. SMA minimums are therefore usually higher than fund subscription minimums. Below the full minimum, a manager may trade a reduced market set or use smaller contracts, such as the Micro E-mini equity index futures CME Group launched in 2019. [3] Either route introduces tracking difference against the flagship programme, which should be measured and disclosed. A fund pools capital and avoids the problem for smaller tickets.
Costs and operational workload
A fund bundles administration, audit, legal and regulatory costs into its expenses and keeps the books on the investor's behalf. An SMA unbundles them. The owner negotiates clearing and execution charges with the FCM, maintains its own legal agreements, monitors margin and records the account in its accounting system. Large allocators often prefer the unbundled model because they already run the infrastructure and value the control. Smaller teams may find the operational load outweighs the benefits.
Management and incentive fees are negotiated in both structures. SMA terms are set account by account and are more often tailored to the size of the allocation.
Side-by-side comparison
| Dimension | Separately managed account | Pooled fund |
|---|---|---|
| Legal ownership | Allocator owns the account and its assets | Fund owns the assets; allocator owns units or interests |
| Transparency | Daily, position-level FCM statements | Periodic NAV and reports; position detail by agreement |
| Liquidity | Often no lockup; exit by instruction | Dealing schedule with notice; gates possible |
| Liability | Losses may exceed the deposit | Normally limited to the amount invested |
| Minimum size | Higher, to replicate the programme | Lower subscription minimums |
| Customisation | Market exclusions, leverage, cash management | Standard terms by share class |
| Operational load | Allocator runs agreements, margin and accounting | Administrator and service providers run it |
Indicative summary of typical arrangements. Actual terms depend on the programme, the FCM and the documents agreed. Not investment, tax or legal advice.
Choosing between them
The decision turns on the allocator more than on the programme. Five questions settle it in practice:
- Is the intended allocation above the manager's SMA minimum without partial funding?
- Does the team have the operations to monitor margin, reconcile daily statements and manage FCM relationships?
- Does governance require position-level transparency, or control over cash and collateral?
- Does the mandate or the allocator's regulator require limited liability?
- Which structure suits the allocator's tax and regulatory position? Specialist advice belongs here.
Intermediate options exist. A fund of one gives a single investor a dedicated vehicle with limited liability and tailored terms, at the cost of establishing and running it. Managed-account platforms hold SMAs inside a fund structure and offer investors the platform's reporting and dealing terms. Allocator IQ records the vehicles, minimum tickets and redemption terms each covered programme offers, so the structure question surfaces early in screening. See the platform and the manager universe.
Frequently asked questions
What is the main difference between a separately managed account and a fund?
Ownership. In an SMA the allocator owns the trading account and its assets and grants the manager trading authority. In a fund the allocator owns units or partnership interests in a vehicle that owns the assets.
Is it possible to lose more than the deposit in a managed futures SMA?
Yes. The account owner is liable for the account, so in extreme market moves losses may exceed the cash deposited and the FCM may require additional margin. A fund investor's loss is normally limited to the amount invested.
Which is more liquid, an SMA or a fund?
An SMA usually is. Many futures SMAs have no lockup and close by instruction, subject to market conditions. Funds deal on a set schedule, often monthly or quarterly for private pools.
What is a fund of one?
A fund of one is a pooled vehicle with a single investor. It combines tailored terms with the limited liability of a fund structure, and the investor bears the cost of establishing and operating the vehicle.
For institutional investors. This article provides general information, not investment, tax or legal advice or a recommendation of any manager, strategy or structure. Futures trading involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.
Sources
- Directive 2009/65/EC (UCITS Directive), Article 76. Frequency of publication of issue and redemption prices.
- CFTC Regulations, 17 CFR 1.55. Risk disclosure statement for futures accounts, including losses beyond the initial deposit.
- CME Group. Launch of Micro E-mini equity index futures, May 2019.