A separately managed account (SMA) is a professionally managed investment portfolio of individual stocks, bonds or other securities owned of individual stocks, bonds or other securities directly by an individual investor.
Unlike mutual funds or ETFs, the investor holds the securities in their own name while a portfolio manager executes trades consistent with agreed objectives, risk limits, and constraints.
An SMA operates under a discretionary management agreement between the investor and a Registered Investment Advisor (RIA) or portfolio management firm.
The manager selects securities based on several criteria:
Holdings are kept in the investor’s custodial or brokerage account, ensuring full visibility and legal ownership.
| Feature | SMA | Mutual Fund | ETF |
|---|---|---|---|
| Ownership | Direct | Pooled | Pooled |
| Customization | High | None | Low |
| Tax Efficiency | High | Low | Moderate |
| Transparency | Daily holdings view | Periodic | Daily |
| Minimum Investment | $100k+ typical | Low | Low |
| Liquidity | Daily | Daily | ntraday |
Investor allocates $500,000 to an SMA managed by an RIA with a dividend-income mandate:
AllianceBernstein is a global investment manager with a singular focus on delivering superior outcomes for clients through active management and differentiated research. Through innovation, technology, and deep client partnerships, AB provides flexible solutions and actionable insights to help investors navigate complex markets confidently.
AB’s SMAs offer direct security ownership, portfolio customization and tax-aware management—guided by our global research platform. For advisors and clients seeking flexibility and transparency, SMAs connect strategy to individual objectives.
Our SMA Service model is designed to help advisors scale their businesses while maximizing value for their clients.
AllianceBernstein offers a range of tax-aware & tax-advantaged strategies with a focus on municipal bonds to help you reach your income goals. Learn more here.
What are completion funds and why are they in your separately managed account (SMA)? Completion funds offer diversification and access to opportunities that would be hard to obtain with individual bonds.
There is no assurance that a separately managed account will achieve its investment objective. Separately managed accounts are subject to market risk, the market values of securities owned will fluctuate so that your investment, when redeemed, may be worth more or less than its original cost.