Commingled Fund
It’s a bunch of assets which used to be single, having come to the finance party stag...now being put together in one large Tinder group. For that finance party, the host had to make the requisite ice sculpture. If that sculpture was done to entertain only one set of assets, its relative cost was probably high. But if it covered a hundred different accounts all invited to the party to ogle the Great Bald Wonder...then its cost per visitor is some one hundredth of what it would have been otherwise.
Commingled funds exist typically when a family is successful and...disparate.
Joe made his money from a shoe factory he sold. Bob made his money from his special head shine serum. And Susy made her money from her plastic surgery clinic. By commingling their assets, they sort of become a kind of hybrid mutual fund...only they don't have to suffer all the regulatory filings of being a mutual fund. They hire a professional manager to run the commingled assets. Think: retired money manager, or someone in the broker-dealer world.
They can draw margin against their funds. They can sell stocks short, i.e. bet they’ll go down. They can buy and sell options in their funds...and a bunch of other freedoms that just buying a vanilla mutual fund wouldn’t have given them.
Wow. With all that, what can't commingled fund do? Well, it sure won't protect you from frostbite if that ice sculpture leaves you a little too...thirsty.
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Finance: What is an Omnibus Account?110 Views
Finance a la shmoop. What is an omnibus account?
Herbi just eats leaves, Carni just eats meat, Omni well it's pretty much [Different buses eating stuff]
everything. So yeah an omnibus as in bus-i-ness or business account services is
a bunch of investors who've all pitched in or wired in their capital to become a
percentage owner of that omnibus account. Why would people do this? Scale, volume,
discounts size, heft. When you have a lot of money in an account basic things like [Lots of money in a suitcase]
audit and legal fees and brokerage services and the fees with them and
other one-off costs get amortized across a lot of people in dollars invested [Definition of Amortization]
rather than being laid entirely or solely on one investor where they can
then be a meaningful percentage of the total and with an omnibus account you [Bus labelled Omni eating leaves]
also get anonymity since it's a broker dealing in street name with the account [Anonymity stamp]
interfacing with the street well investors can live if they want in the
lovely dark shadows of Erewhon. Omnibus accounts are sort of like your own [Full moon in a dark sky]
custom mutual fund without the whole nav, net asset value stamp requirements at
the end of each trading day and all the other regulations and filings and legal
crap needed for publicly offered securities it's like having a fully [Book labelled my very own omnibus account]
gassed up bus with a working GPS and Waze system you can drive anywhere you [Guy sat on a bus]
want on the investing landscape you don't have to tell anyone outside of
your own partners about it, and it works great as long as you all want to eat the
same kind of financial cooking.. [Omni asking Carni if he is going to finish his food]
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