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Feb 14, 2010 1:49 am

SMA’s are generally a better fit for larger client portfolios in my opinion $5 million and up.   The high end shops and trust companies like JP Morgan Private Bank, AB, NT, GS, essentially have most of their clients money in proprietary SMA’s.  JP uses  a staggerig 70& of their proprietary SMA’s for clients and most are fixed income.  Essentailly it comes down to two business models are you and your team going to create your own SMA in each asset class by selecting 30-60 securities and putting clients portfolios in them or are you going to pick the best managers you can find at each asset class.  Most high end RIAs that came out of outfits like the ones previously mentioned work wiith foundations, trusts, etc. and thus created their own SMA by managing invdividual stock selection.  Most retail advisors on this forum aren’t exclusively focusing on this segment and most don’t have the expertise of Bondguy with Muni’s thus using some SMA’s for certain asset classes could be beneficial.  However putting a client in some managed money program when they have 250k only seems like overkill especially when you should be able to creat an asset allocation with institutional funds and etfs that wil be far less than the 300 beeps they might have to pay.  Also in a situation like this you have more control over the portfolio especially if you want to make tactical changes while the SMA manager will stay the course with their large cap stocks regardless of whether you think the market will retouch 08 lows. 

Feb 14, 2010 5:56 am

Wow. some sophistocated ways to lose money for clients.

Feb 17, 2010 2:50 pm

SMA’s for accounts under 500k are not worth it. It’s easy to find quality ways to invest 500k as you are still working with very liquid share amounts. Once a client gets to 5MM or more SMA’s make alot more sense, particularly on the fixed income side since you have access to bigger discounts on individual bond purchases.

Feb 19, 2010 6:37 am


Feb 25, 2010 5:23 am

imo sma's are for $1mill + accounts