Managed Accounts

A separately managed account, or SMA, is an investment vehicle available to individuals that can offer the same stock and bond portfolio diversification opportunities as mutual funds. An SMA, however, gives the investor direct ownership of securities in their accounts, with the potential to manage taxable gains more advantageously and to customize elements of the managed strategy. Rather than making individual trading decisions, SMA investors generally engage in a consultative process with their financial professionals to outline their personal objectives, risk preferences, and investment restrictions.

The Benefits of Managed Accounts

Separately managed accounts (SMAs) are the investment vehicle of choice among many high net worth individuals seeking sophisticated investment solutions and direct ownership of securities in their accounts.

Establishing an SMA is a consultative process. SMA investors typically work with their financial professionals to establish personal objectives and investment plans. SMA owners also may have access to the portfolio manager, a service usually reserved for institutional clients. A higher level of service than other retail investment solutions is typical, and may include periodic reports summarizing account activity and performance, as well as in-person meetings, conference calls and written commentaries.

Unlike mutual funds, exchange traded funds and other pooled vehicles, SMA investors can:

  • Impose reasonable investment restrictions on the management of their accounts
  • Impose reasonable limits on the amount of gains or losses recognized in their accounts

Separately Managed Accounts

BlackRock is a leader among SMA Managers with $92.6 billion in assets under management.1 Our scale, global investment expertise and industry-leading risk-management system, Aladdin®, are behind each managed solution we implement.

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More on Managed Accounts

Do SMA investors manage individual trades in their portfolio?

An SMA investor may choose to work closely with the financial professional managing their account. Many, however, elect to entrust the granular decision making to their portfolio manager, under general limits and preferences.

Are SMAs identical to mutual funds?

SMAs may appear to resemble mutual funds in that both usually rely on management by financial professionals, enable diversification including low, moderate and high risk (and potentially high-gain) investing, and produce gains or losses that impact the investor's tax liability. However, they differ in key areas:

  • SMA investors own the underlying securities in their portfolios rather than shares in the mutual fund.
  • SMAs can provide investors with potential tax advantages.
  • SMAs enable investors to customize their portfolio and directly impact trading decisions.

What are some of the risks associated with separately managed accounts?

As with any other type of investment, separately managed accounts carry some risk. The returns and portfolio value may fluctuate. Gains are not guaranteed, and monetary losses are possible. Dividends may be less (or more) than expected, and applicable rules and regulations may change, which can also affect value.

Investors may be able to minimize risk by electing to work with a proactive, qualified and experienced asset manager, like BlackRock, with a track record of managing SMAs in alignment with client goals and preferences.