A separately managed account (SMA) is a professionally managed portfolio of individual securities and can be customized to match an investor's preferences. Unlike pooled investment vehicles, an SMA gives you direct ownership of the assets in your account. This means you can see every holding and control when gains are realized and adjust the portfolio for personal strategy.
SMAs are notable for their personalization and transparency. They allow financial professionals to design investment strategies based on client needs. Tax efficiency is another potential benefit since managers can harvest losses or offset gains to reduce tax liabilities.
For US advisors and RIAs, SMAs are often used by clients seeking greater flexibility and control. Let’s explore the leading SMA providers serving the market today.
The US market offers a wide range of separately managed account providers. They combine professional oversight with customizable strategies, allowing investors to match portfolios to their financial goals. Below are some of the biggest SMA providers servicing the US market today.
Vanguard’s approach to separately managed accounts focuses on diversification and disciplined portfolio design at a low cost. Its Diversified Managed Account Strategies provide investors with access to four index-based model portfolios. These are conservative, balanced, growth, and high growth, each designed to suit different risk levels and investment timeframes.
These portfolios use Vanguard’s broad range of exchange-traded funds (ETFs). Depending on the strategy, investors gain access to thousands of securities across asset classes. The goal is to provide diversified returns while keeping costs low.
The strategies are built by Vanguard’s Investment Strategy Group, which determines the asset allocation and rebalancing framework. Instead of being offered directly by Vanguard, however, these portfolios are implemented through external managed account providers. These include Macquarie Wrap, HUB24, and Netwealth who handle administration, reporting, and client access.
Vanguard’s SMA offering follows a strategic asset allocation model, combining simplicity with breadth. Portfolios are style-neutral and designed to track the weighted performance of their underlying indices. Its focus on tax-efficient indexing, cost control, and long-term performance appeals to advisors who value consistency and scale.
Minimum investment thresholds start at around $50,000. Advisors may be interested in the balance of customization and simplicity. Vanguard’s SMAs are also suited to cost-conscious investors who want direct ownership of securities and exposure to global markets through a stringent framework.
BlackRock offers separately managed accounts in the US focused on flexibility, scale, and data-driven portfolio management. Its SMAs allow advisors to create portfolios tailored to each client’s tax situation, investment objectives, and personal values.
At the core of its offering is direct indexing through Aperio, a BlackRock subsidiary that replicates market indexes with tax optimization. By directly owning individual securities, investors can manage capital gains more efficiently through tax-loss harvesting. This approach allows advisors design portfolios that maintain index-like performance while potentially improving after-tax outcomes.
BlackRock also provides fixed income and option overlay SMA strategies. The fixed income program emphasizes individual bond ownership with support from the credit research team and risk management system. Its option overlay service is managed through SpiderRock Advisors and helps reduce concentrated stock risk.
Fidelity Investments has a comprehensive platform for separately managed accounts. It combines active management, direct indexing, and personalized portfolio construction. Its SMAs are managed by Strategic Advisers LLC, a registered investment adviser within the Fidelity group.
Fidelity’s multi-manager SMA platform provides both actively managed and index-based strategies. The Fidelity US Large Cap Strategy combines growth, value, and equity styles for capital appreciation and longevity. There’s also the Fidelity US Total Market Index Strategy, which mirrors the return of the Fidelity US Total Investable Market Index.
Minimum investments typically start at $100,000, with advisory fees ranging from 0.20 percent to 0.70 percent depending on the chosen strategy. Fidelity also offers lower-entry options such as FidFolios. This uses fractional shares to build diversified portfolios for smaller accounts.
Parametric, part of Morgan Stanley Investment Management, specializes in tax-managed separately managed accounts with emphasis on customization, transparency, and after-tax efficiency. The firm manages over $418 billion in customized SMA portfolios across equity and fixed income strategies as of mid-2025.
Its Custom Separately Managed Accounts allow investors to build multi-asset portfolios tailored to their goals, preferences, and risk tolerance. Advisors can choose from active, passive, or systematic approaches, integrating tax management, factor investing, or responsible investing screens.
A key feature of Parametric’s platform is the Custom Core Equity solution, which uses direct indexing to create portfolios aligned with set criteria. Each portfolio is monitored for tax-loss harvesting opportunities and optimized for both risk and return. Here’s a comparison video by Parametric:
The firm provides a range of options for separately managed accounts across US equity, global equity, taxable fixed income, and municipal fixed income categories. Each portfolio is designed to give investors direct ownership of securities while maintaining flexibility for customization. Minimums generally start at $100,000 for equity SMAs and $250,000 for fixed income SMAs.
One of its flagship offerings, the Capital Group Intermediate Municipal SMA, received a Morningstar Gold Medalist Rating as of June 2025 for its active management process and focus on after-tax income. Municipal bond SMAs provide income that is typically exempt from federal taxes with additional state tax benefits for residents who select state-specific portfolios.
Capital Group’s equity SMAs also includes options like the US Core, Flexible Growth, and Conservative Growth and Income strategies. These are managed to outperform their benchmarks over full market cycles. The firm’s long history may appeal to advisors who value fundamental research and long-term performance in managed portfolios.
You can use Principal Asset Management when you need income-oriented SMA sleeves and components you can slot into balanced portfolios. The firm offers dedicated fixed income SMAs, including national municipal income and core fixed income strategies. This lets you target tax-exempt income or core bond exposure within a single separately managed account.
Beyond income solutions, Principal also runs research-driven equity SMAs under the Principal Aligned team. These strategies are focused on owner-operator companies while maintaining high active share.
New York Life Investments offers a wide range of separately managed account solutions through its specialized affiliates. These SMAs provide exposure to fixed-income and equity strategies while keeping up with environmental, social, and governance (ESG) principles for civic-conscious clients.
Through its affiliate Epoch Investment Partners, New York Life Investments also manages the US Equity Yield SMA. These separately managed accounts focus on companies with strong free cash flow and disciplined capital allocation. The strategy emphasizes shareholder yield achieved through dividends, share repurchases, and debt reduction.
These combined capabilities may appeal to advisors with conservative clients seeking income generation and capital preservation.
Nuveen is a provider of municipal bond and impact investing separately managed accounts. With over 125 years of experience, the firm applies an active and client-centered approach to managing tax-sensitive portfolios.
Nuveen’s strategies are more on customization and control. Investors can tailor portfolios to include state-specific municipal bonds or preference-based holdings that meet their personal goals. Each portfolio is managed with a focus on minimizing tax burdens through long-term portfolio construction.
The firm also integrates ESG principles into its impact-oriented SMA offerings. This approach allows investors to pursue financial returns alongside measurable social and environmental outcomes.
Collectively, these firms are among the major platforms for separately managed accounts in the US.
There is no straightforward answer as it often depends on the investor’s priorities. SMAs provide direct ownership of securities. This allows for greater control, transparency, and potential tax efficiency. This structure lets investors customize portfolios, exclude specific holdings, and work with managers to optimize after-tax results.
However, this level of personalization comes at a higher cost. SMAs usually charge annual management fees ranging from 0.25 percent to 1.5 percent of assets. They may also require minimum investments of $100,000 or more. By contrast, mutual funds are more affordable and accessible, making them better suited for smaller portfolios or investors seeking simplicity.
In essence, SMAs are often used by high-net-worth investors who value customization and tax management. In comparison, mutual funds are for those prioritizing convenience and lower fees.
Here’s a comprehensive overview summarizing the advantages and disadvantages of separately managed accounts:
| Pros | Cons |
|---|---|
| Portfolios can be tailored to match each investor’s goals, values, and tax situation | Most SMAs require at least $100,000 to open an account |
| Investors own individual securities instead of fund shares, offering greater control and transparency | Annual management fees typically range from 0.25% to 1.5% of assets under management |
| Managers can use tax-loss harvesting and gain control over timing of capital gains | Smaller SMA portfolios may hold fewer securities compared to mutual funds or ETFs |
| Experienced portfolio managers handle strategy, trading, and rebalancing | Custom portfolios may take longer to adjust or liquidate than pooled funds |
| Investors can see all holdings at any time | Requires more involvement from both the investor and advisor to manage effectively |
Here’s a video explaining more about SMAs:
Ultimately, the choice of separately managed accounts depends on the investors and advisors. As more platforms lower entry barriers, SMAs are becoming a practical option for a wider range of clients, not just the ultra-wealthy.
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