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
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Indexing
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High Alpha
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Absolute
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MC285-31-01-2024 (6M)