Large asset owners, UTIMCO and the State of Wisconsin Investment Board (SWIB), have partnered with multi-strategy hedge fund Walleye Capital to create Dockside, a managed account platform.
Dockside provides institutional investors with direct access to portfolio managers, leveraging the infrastructure, risk systems, and financing of a multi-manager fund, but at a significantly lower cost.
The platform offers unprecedented trade-level transparency, enabling faster due diligence, dynamic risk management, and more efficient capital allocation compared to traditional fund investments.
By aggregating multiple single-manager strategies, allocators aim to construct a diversified, high Sharpe ratio portfolio that mimics the performance of a top-tier multi-strat fund while retaining greater control and flexibility.
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Concerns Raised
Risk of 'groupthink' as many platforms and managers use the same standard risk models (e.g., BARA).
Potential for de-leveraging risk in crowded trades, as the platform's tools may be similar to those used by other large multi-manager funds.
The challenge of managing the platform as a distinct portfolio versus an integrated tool within a broader hedge fund book.
Opportunities Identified
Significant annual cost savings, with SWIB estimating potential savings of $100 million per year.
Ability to access and fund a wider pool of portfolio manager talent that may not be available through traditional funds.
Constructing a customized, high Sharpe ratio portfolio by aggregating uncorrelated single-manager strategies.
Vertically integrating operations, such as SWIB lending its own securities to the platform to generate additional revenue.