What is a separately managed account (SMA)?
A SMA helps bridge a gap.
On one side are standard mutual funds, which are attractively priced investment vehicles used by millions of people.
On the other are costlier customised segregated accounts that are best suited to institutional investors.
However, in the middle are SMAs. These offer family offices and the end clients of intermediaries, e.g. high-net-worth individuals (HNWI) the same benefits as institutional investors – a diverse and customised solution – but with potentially lower fees.
| Standard Mutual Funds | SMAs (for intermediaries) | Institutional segregated accounts | |
| Type of underlying investors | Individual investors | Family offices, clients of intermediaries, e.g. HNWI | Institutional investors |
| Funding | Shares purchased with cash | Cash | Cash and existing securities |
| Investors will invest in | Units in the mutual funds | Direct securities | Direct securities |
| Investment objective | Fixed by the Fund | Set with the investor | Set with the investor |
| Portfolio customisation | No customisation | Customised asset allocation | Customised asset allocation |
| Fees | Implicit fees | Explicit fee structure | Flexible according to portfolio structure |
| Transparency | Own shares in the Fund, but not able to see the full underlying securities | Full transparency of the underlying securities | Full transparency of the underlying securities |
Introduction to SMA building blocks
The critical aspect of any SMA is choice. Below are some examples of building blocks which you could consider selecting one or multiple investment strategy(ies) to meet your client’s specific needs.
Income
|
Indexing
|
High Alpha
|
Absolute
|
IMPORTANT INFORMATION:
This document is for Professional Investors only and is not intended as investment advice. The information contained in this document is provided solely for your use.
This document must not be used for the purpose of an offer or solicitation in any jurisdiction or in any circumstances in which such offer or solicitation is unlawful or otherwise not permitted. This document should not be issued, circulated, distributed, published, reproduced or cause to be issued, circulated, distributed, published or reproduced (whether in whole or in part) to any other persons without the prior written consent of BNY Mellon Investment Management Hong Kong Limited.
Investment involves risk. Past performance information presented is not indicative of future performance. Investment returns may be exposed to exchange rate fluctuations. The value of investments may go down or up. This document has not been reviewed by the Securities and Futures Commission.
Information in this document is subject to change without notice. To the extent permitted by applicable laws, rules, codes and guidelines, BNY Mellon Investment Management Hong Kong Limited accepts no liability whatsoever whether direct or indirect that may arise from the use of or reliance on the information contained in this document.
The information has been provided without taking into account the investment objective, financial situation or needs of any particular person. To the extent permitted by applicable laws, rules, codes and guidelines, BNY Mellon Investment Management Hong Kong Limited and its affiliates are not responsible for any subsequent investment advice given based on the information supplied. You should not rely on this document alone to make investment decisions. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.
In Hong Kong, the issuer of this document is BNY Mellon Investment Management Hong Kong Limited, which is registered with the Securities and Futures Commission (Central Entity Number: AQI762).
BNY Mellon Investment Management Hong Kong Limited and any other BNY Mellon entity(ies) mentioned are ultimately owned by The Bank of New York Mellon Corporation. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and its subsidiaries.
MC278-31-01-2024 (6M)