Anybody have experience running SMAs at IB?

G

GlobalMacro90

Anybody have experience running SMAs at IB? From what I can tell you can just trade an institutional master account and have the SMAs basically mirror the master account. Seem very scalable (trading one account basically same amount of work as trading 100). Also looks like a good amount of back office stuff such as fee collection, taxes, reporting, etc is automated.

This seems like a very good structure if you dont have a lot of AUM, as the traditional hedge fund structure is very expensive to set up and maintain. Would you be registered as a RIA to trade this way (master account with connected SMAs)? Is there any hoops to jump through if you trade with leverage? Would each SMA just be levered the same as the master?

If anybody could share their experience in this area that would be great.

Thanks
 
What is sma? They have a friends and family account that allows you to trade 15 accounts.
 
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GlobalMacro90 said:
Anybody have experience running SMAs at IB? From what I can tell you can just trade an institutional master account and have the SMAs basically mirror the master account. Seem very scalable (trading one account basically same amount of work as trading 100). Also looks like a good amount of back office stuff such as fee collection, taxes, reporting, etc is automated.

This seems like a very good structure if you dont have a lot of AUM, as the traditional hedge fund structure is very expensive to set up and maintain. Would you be registered as a RIA to trade this way (master account with connected SMAs)? Is there any hoops to jump through if you trade with leverage? Would each SMA just be levered the same as the master?

If anybody could share their experience in this area that would be great.

Thanks
More...

Unfortunately IB is not good for SMAs. They only allow accounts' allocation based on percentages and not contract quantity. We used to do allocations based on SMA balance, and needed to be precise which account get which number of contracts. IB does not have such capability.
 
I manage long-only and long/short strategies for SMAs on IB, and can confirm that it's a bit of a challenge. Accounts do not perfectly mirror the model portfolio. For example, sometimes when I look to exit a position, I'll submit the order with a percentage allocation of -100%. Some accounts, for some reason, end up having a negative position and I have to quickly take a corresponding long position in the "independent" model.

Other than that, theoretically, the IB platform is a great way to establish an investment management business.

I hope this helped.
 
Mr.Wahdy said:
I manage long-only and long/short strategies for SMAs on IB, and can confirm that it's a bit of a challenge. Accounts do not perfectly mirror the model portfolio. For example, sometimes when I look to exit a position, I'll submit the order with a percentage allocation of -100%. Some accounts, for some reason, end up having a negative position and I have to quickly take a corresponding long position in the "independent" model.

Other than that, theoretically, the IB platform is a great way to establish an investment management business.

I hope this helped.
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Exactly why we left IB, our situation was even worse, since we traded futures, and could not allocate the exact number of contracts to account that we needed to.
 
RedDuke said:
Unfortunately IB is not good for SMAs. They only allow accounts' allocation based on percentages and not contract quantity. We used to do allocations based on SMA balance, and needed to be precise which account get which number of contracts. IB does not have such capability.
More...

This thread/comment was brought to my attention. IBKR does provide the ability to allocate a specific number of shares to multiple accounts via an allocation profile. We also provide the ability to submit orders for a specific number of shares for a single account directly in the Order Entry window. I've also been told we are looking into making the process simpler to do. I don't have an ETA though.
 
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