Separately managed accounts continue to flex their muscle.
A new study from Washington, D.C.-based Money Management Institute shows assets in separately managed accounts rose 15 percent in the second quarter to $442.86 billion nationwide. (The growth figure is relative to the first quarter.)
The numbers affirm the growing appeal of SMAs, which, according to the study, have delivered stable returns even through even the worst months of the market.
Not surprisingly, the wirehouses are the source of much of this growth. The biggest firms have been encouraging reps to spread the SMA gospel — that is, placing account management duties in the hands of people focused squarely on investment performance can significantly improve returns — and the preaching is having the desired effect.
“We've all been pushing it pretty hard, so those figures aren't surprising,” says one Merrill rep. “It'll keep going up, I'm sure, if we keep doing what they're having us doing.”
Also contributing to the growth are innovations in the way SMAs are administered. For instance, the wirehouses have been working hard in recent months to simplify the process of opening and monitoring accounts. (See related story on page 31.)
Though wirehouses still control the majority of assets in SMAs, smaller, regional firms, along with banks, are making inroads.
Mid-sized firms gained 5 percent market share in the study, while the Big Five wirehouses lost 5.87 percent.
“There's a group of 40-plus firms outside the top five that are growing faster than the wirehouse group,” says Jack Rabun, an analyst at Cerulli Associates. Those firms, according to Rabun, tend to partner with smaller asset management companies.