Debunking the Top Five Myths About Outsourced Trading Desks
Outsourced trading desks have become an essential tool for hedge funds and asset managers, but several trading myths still linger. Misconceptions can prevent funds and asset managers from exploring a solution that offers cost efficiency, increased global coverage, and access to specialized trading expertise that can significantly increase their investable universe. Let’s tackle them one by one.
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Myth 1: Outsourced Trading Is Only for Small Funds
Early on, outsourced trading was used mostly by emerging managers without the resources for a full desk. Today, that’s no longer true. Mid- and large-sized funds managing $500M+ increasingly leverage outsourced desks to expand into new geographies, access specialized asset-class expertise, and scale without ballooning overhead.
Myth 2: You Lose Control If You Outsource
A major concern for managers is control. Some believe that facetime equates to retaining control over your portfolio. The truth is, a modern outsourced trading desk integrates seamlessly into your investment workflow, acting as an extension of your team. Portfolio managers remain in charge of strategy and trade decisions, while the outsourced partner provides coverage, speed, and execution expertise.
Myth 3: Outsourced Trading Only Handles Basic Trades
False. Some managers believe outsourced desks are limited to vanilla equities. In reality, OT providers can support multi-asset trading: derivatives, FX, distressed credit, and illiquid securities. Funds now turn to outsourced trading desks precisely for help with complex strategies and difficult-to-execute markets.
Myth 4: Outsourced Providers Are Opaque and Conflicted
Partially true. Traditional broker-led models did create conflicts of interest by steering trades through preferred counterparties. But newer models, such as conflict-free buy-side approaches, operate with transparency, preserving your broker relationships and ensuring alignment with your fund’s best interests.
Myth 5: Outsourced Trading Is More Expensive than In-House
The opposite is usually true. Maintaining an in-house desk means fixed costs: salaries, benefits, Bloomberg terminals, OMS systems, espresso machines that remain constant regardless of trading volume. An outsourced trading desk transforms those fixed costs into variable costs tied directly to trading velocity and volumes, improving flexibility and overall cost efficiency.
Outsourced Trading Myths Can Hold You Back
The biggest trading myths around outsourced trading desks come from outdated assumptions. Modern outsourced trading is not about losing control or cutting corners but helping managers scale efficiently. For funds looking to grow, an outsourced trading desk can provide the same experience as an in-house desk, without the heavy overhead.
>> download the full whitepaper here.
Disclosure:
Meraki Global Advisors LLC is a FINRA registered broker-dealer and member of SIPC headquartered in Park City, UT. The content provided herein is not an offer, solicitation or recommendation of any securities. Meraki and its representatives make no investment recommendations whatsoever. Past performance is not an indication of future results. This document may not be duplicated or copied, is protected by copyright law and may contain privileged or confidential information. Information contained herein does not constitute tax, legal or other professional advice. Content is for informational and educational purposes only. All rights reserved 2025.
