Displaying items by tag: smas

Separately Managed Accounts (SMAs) offer notable advantages for institutional investors looking to invest in cryptocurrencies compared to ETFs. While ETFs have become popular among new crypto investors, SMAs provide direct ownership of assets, allowing for greater customization of portfolios and tailored risk management. 

This direct control also facilitates more effective tax strategies and access to a broader range of digital assets beyond just Bitcoin or Ether. Unlike ETFs, which are passive, SMAs benefit from active management, enabling investors to adjust their portfolios in response to market changes and potentially achieve higher returns. 

Additionally, SMAs operate in the 24/7 crypto market, avoiding the limitations of traditional market hours and minimizing the risk of price gaps. For high-net-worth individuals and institutions, the flexibility, personalized approach, and potential for outperformance make SMAs an increasingly appealing option over ETFs.

Finsum: Being able to have access to a cryptocurrency 24/7 is a critical advantage because their markets react overnight with great frequency. 

SEI has expanded its suite of Separately Managed Accounts (SMAs) and Unified Managed Accounts (UMAs) by introducing new strategies focused on direct indexing and factor-based investments. These additions include fixed income strategies, such as the Systematic U.S. Aggregate Bond Core and the Systematic Municipal Bond Core, as well as equity options like the Systematic U.S. Dividend Yield Core and the U.S. Dividend Yield Multi-Factor SMA. 

These offerings aim to help advisors serve mass-affluent, high-net-worth, and ultra-high-net-worth clients with tailored solutions that offer flexibility and tax optimization.

The move comes as UMAs gain popularity, with assets growing at an annual rate of 34% over the past five years, according to Cerulli. SEI’s expansion aligns with broader industry trends, as other major players like Envestnet and Dimensional.

Finsum: An SMA makes a lot of sense for direct indexing options given the tax implications.

The asset management industry is seeing a significant shift towards Separately Managed Accounts (SMAs), with assets growing by 30% over the past two years, according to Cerulli Associates. This growth is expected to continue, with projections suggesting SMAs will reach $3.6 trillion in assets by 2027, up from $2.4 trillion today. 

SMAs offer tax advantages and personalization options that are appealing to investors, allowing them to hold individual securities and tailor portfolios to their specific needs. SMAs are particularly useful for strategies that benefit from direct ownership of securities, such as tax-loss harvesting and options overlays, which can enhance after-tax returns and generate additional income. 

The rapid innovation in this space means that SMAs are becoming an increasingly attractive option for investors looking for a personalized approach to asset management.

Finsum: We expect the SMA boom to continue with trends in both demographics and wealth management in the US, so familiarity is key.

A recent Goldman Sachs survey reveals that investors are enthusiastic about separately managed accounts (SMAs). Financial advisors appreciate SMAs for their professional management, customization, transparency, tax efficiency, and diversification benefits. 

Chris Mankoff of JTL Wealth Partners finds SMAs advantageous for aligning with clients' preferences and optimizing tax strategies. While there have been challenges in the past with SMAs but the recent technological advancements have made them more accessible and effective. 

Direct indexing, a step beyond SMAs, leverages technology for customized tax management and ESG preferences. Despite their benefits, SMAs may not be suitable for all clients, particularly those with smaller portfolios or predominantly pretax investments.

Finsum: While SMAs might not be for all, with a sizeable portfolio technology makes them easier for advisors to manage. 

Strategic inflection points often build up gradually before causing sudden change, reflecting the need for constant innovation and adaptation in business. Embracing technology, such as direct indexing can create efficiencies, scale operations, and enhance investment processes which is crucial for asset managers. 

Understanding and meeting complex client demands, especially in retail, is essential as clients seek value, not just investment vehicles. The rise of ETFs and SMAs shows the importance of offering cost-effective, customizable solutions, while active management must justify its value in a fee-compressed environment. 

Indexing and alternatives have gained traction due to their reliable and affordable returns, but asset managers must continue to adapt and price their offerings appropriately. Ultimately, leveraging technology and maintaining a client-centric focus are key to navigating disruption and ensuring long-term success.

Finsum: Direct indexing should really be thought of as alpha that is on the table ready to deliver to clients that can afford the sizeable investment.