Edward L. Shugrue III, Chief Executive Officer for Talmage, LLC
Edward Shugrue is a moderator for the upcoming iGlobal Forum Alternative Private Equity Structures Event on October 24th in New York. He is the Chief Executive Officer for Talmage, an independently owned New York-based Registered Investment Advisor with $1.7 billion of AUM that is an active investor in U.S. commercial real estate debt having made more than $10 billion of investments across the capital structure since 2003. Talmage has significant experience managing commingled institutional investment vehicles with multiple limited partners and in managing highly customized separately managed accounts (SMAs), typically for clients who invest with Talmage on a commingled basis. Edward will be sharing his experiences working for Talmage as he speaks on the “Using Separate Accounts to Customize Your Private Equity Portfolio” panel this Thursday.
Q: In your time working in the field, how has the role of separate accounts developed in individual asset allocation and risk reduction?
A: In our view, SMAs are highly customizable tools that can fulfill very specific client needs, regarding asset allocation and risk management. We have crafted numerous SMAs for clients who required immediate exposure to a specific asset class to fulfill allocation needs coupled with numerous parameters such as duration, return profile, and liquidity to address risk management concerns. An SMA can be an important asset with which to sharpen the focus of a sector investment in a commingled fund that has comparatively open parameters.
Q: Do separate accounts benefit GPs more than LPs? How does this disparity change in times of difficult fundraising?
A: SMAs are mutually beneficial for GPs and LPs. They provide the GP with a broader and often highly complementary mandate while affording the LP a highly flexible tool with which to better shape and manage their portfolio.
Q: Where do you see the most success in the future regarding the use of separate accounts in private equity portfolios?
A: We see SMAs as a flexible way for investors in sector specific commingled funds to fulfill portfolio objectives with very focused mandates that can be easily expanded/contracted as their underlying portfolios develop and evolve. Importantly, SMAs provide a high level of customization and liquidity that can be amended on a moment’s notice to address client needs.