Separately Managed Accounts (SMAs) have moved from niche to mainstream.
Allocators prize transparency and liquidity, fueling SMA demand.
Hedge funds use SMAs to attract top portfolio manager talent.
SMA infrastructure continues to scale across major platforms.
(HedgeCo.Net) Across the hedge fund ecosystem, one of the most transformative trends in late 2025 is the rapid adoption of Separately Managed Accounts (SMAs) — custom portfolio solutions originally favored by ultra-wealthy individuals. Today, SMAs are poised to become a central pillar of institutional hedge fund allocations. Business Insider
Why SMAs Now?
Traditionally, SMAs were considered a niche, bespoke option. Now they are coveted by allocators for key benefits:
- ? Transparency — SMAs provide daily reporting, eliminating “black-box” concerns that often deter sophisticated investors. Business Insider
- ? Liquidity and Control — Unlike some commingled hedge funds, SMAs allow greater investor voice and trade-level visibility. Business Insider
- ? Talent Access — Managers use SMAs to attract top portfolio managers who seek autonomy and performance attribution clarity. Business Insider
Institutional platforms like Innocap and multi-manager operations have seen SMA capital surge by more than 25 %, crossing $300 billion in recent years, and insiders expect this trend to intensify through 2026. Business Insider
Challenges Ahead
Despite enthusiasm, the SMA model also raises questions about “shadow alpha” — the potential for allocators to internalize strategies rather than compensate PMs fairly. Business Insider
Still, SMAs clearly represent a paradigm shift in how hedge funds package strategies for sophisticated investors.