Companies rely on separately managed accounts (SMAs) for fixed-income investing, citing transparency, flexibility, cost control, and active management as enduring advantages. SMAs allow portfolios to be customized to individual client needs, including tax management, income goals, liquidity planning, and state-specific considerations, setting them apart from pooled vehicles like mutual funds and ETFs. 

Investor demand reflects these benefits, with municipal bond SMAs growing to an estimated $1.2 trillion by early 2025, even as mutual fund and direct retail holdings have declined. While ETFs have expanded rapidly and offer liquidity and low costs, they still represent a small share of the municipal market and often serve as temporary allocations rather than long-term solutions. 

Active SMA managers can exploit market dislocations, manage redemptions more deliberately, and achieve better execution through scale, research, and trading relationships. 

Finsum: For the financial industry, the resurgence of SMAs highlights a broader shift toward personalized, outcome-oriented fixed-income solutions as investors seek control and transparency.