Managed accounts: Planning for what’s next

Managed accounts have swelled in recent years to become the dominant investment vehicle for Australian advisers and their clients, used by around 3 in 5 advice practitioners¹ and totalling around $300 billion in local assets under management.²

BlackRock is one of the pioneers in this space, having launched our first local separately managed account (SMA) in early 2015. Globally, BlackRock’s model portfolio AUM surpassed US$300 billion in 2025, with more than 60,000 advisers worldwide using our managed accounts.³ Locally, our flagship Enhanced Strategic Model Portfolios have achieved top quartile performance over 1, 3, 5 and 10 year time horizons.⁴

So what lessons have we learned as a business over the journey to innovate and grow our models, and more importantly, where do we think the industry is going next? Below are some of the key trends we see separating the good from the bad when it comes to managed accounts.

1. Raising the bar on risk management

This is arguably the key deciding factor in the local market right now when it comes to which managed account provider advisers, licensees and platforms want to work with. As managed accounts have reached critical mass in Australia, ASIC has highlighted the industry as a key regulatory focus in its 2026 Corporate Plan, and will conduct a review this year of how managed accounts interact with adviser best interest duty obligations.

By outsourcing management of a client’s portfolio to a professional investment manager, it’s vital the adviser can point to good governance practices that the manager and platform have in place to avoid errors and unintended risks – a key concern for the regulator given recent high-profile fund failures.

Risk is a broad concept and it can be interpreted in different ways. For example, some investors tend to define risk in the form of volatility or deviation from a particular benchmark, while others tend to view risk through the lens of drawdowns or probability of loss.

At BlackRock, we use Aladdin – an institutional grade risk management platform – to assess these different dimensions of risk holistically. This helps to ensure that we take the right kinds of risks, at the right level, that are sized in line with the portfolio’s objectives, risk profile and guidelines.

Aladdin also enables us to stress test the portfolios to evaluate how they will respond in different market environments – both upside and downside scenarios. This discipline gives clients and platforms confidence that BlackRock managed portfolios remain aligned with their mandate, objectives and are resilient across different market environments.

The BlackRock model portfolio risk management process

Source: BlackRock as of March 2026. For illustrative purposes only

2. Keeping clients informed and engaged

Outsourcing of client portfolios to professionals via managed accounts has both upsides and downsides – one consequence being that some investors may not know exactly what they’re invested in.

Recent data indicates that nearly half of managed account investors are unaware of their model portfolio holdings⁵, highlighting an opportunity for best-in-class managed account providers to inform and engage their end clients.

This is something that BlackRock has prioritised since its beginnings in the managed account space, from offering full portfolio reporting access online, to providing responsive video commentary from our portfolio managers and analytics that illustrate how portfolios will react in different scenarios.

Over the course of scaling our global managed accounts offering, we’ve learned that enhancing the adviser experience and making life easy for our clients is crucial.

3. Tailoring at scale

The ability to tailor from the ‘cookie cutter’ managed account, without losing the benefits of scale that the technology provides, will be one of the most important trends driving growth in the sector going forward, in our view.

Around 1 in 5 Australian advisers that currently uses managed accounts is looking to build a more tailored service for clients in the future⁶, while nearly half of managed accounts industry market share now sits with private label model portfolios.⁷

A key focus of our local business is developing the technology to cater for more investment appetites through model portfolios, particularly given advice industry consolidation that might see many types of businesses or client segments sit across a single firm.

By combining BlackRock’s asset allocation thinking with individual business preferences, and adding a risk management overlay using Aladdin, we can create custom solution that provides the best of both worlds for advisers and clients.

4. Innovating for a changing investment landscape

While there has been a shift towards broad index exposures across major asset classes to form the core of client portfolios we believe this trend may be set to change in the future.

The pace of more granular targeted ETFs and active ETF growth in recent years suggests investors will continue to allocate increasing amounts to this product category. For example, total active ETF AUM is expected to reach US$4.3 trillion globally by 2030.⁸

Dispersion between the ‘winners’ and ‘losers’ in the global equity market is also 20% higher than in the years before the pandemic, creating more opportunities for managers to deliver outperformance via a more targeted or active approach versus a broad based index approach.

At the same time, we are seeing increasing interest in new forms of portfolio diversification. Stock-bond correlation has been positive for much of the past five years, reflecting the current environment of widening global government debt and persistent inflation, and undermining the diversification benefits the two core asset classes provide each other.

In line with this, the ability to add new building blocks as circumstances evolve has been a major differentiating factor of BlackRock’s model business. We were one of the first model managers to add gold as a portfolio diversifier over two years ago, which has been one of the top contributors to the portfolios’ performance.⁹

We have also recently added a dynamic factor rotation strategy to gain US equity exposure within the Enhanced Strategic Model Portfolios, as standard US equity indices such as the S&P500 index have become increasingly concentrated with the Magnificent 7 tech stocks.¹⁰ We think the US is a good example of a market where traditional index approaches may have worked well in previous years, but the environment may be shifting to a more advantageous one for active strategies.

Ultimately, we expect managed accounts to be a continued driving force of growth in the adviser market both globally and locally, with Australian managed account AUM expected to grow another $100 billion over the next four years.¹¹