Customization is becoming the norm in our modern world. We get our coffees made to order and pick out custom options when buying a car. Ordering “off-the-menu” is no longer unusual, and our smart devices give customized recommendations for our streaming services. Everything is holistic or bespoke or curated, made just for you. The timing has never been better to add that type of customization to your investments.
A separately managed account (SMA) is an individual investment portfolio that directly invests in stocks, bonds, or a combination and is overseen by a professional money manager or investment management firm. In an SMA, the investor owns individual securities rather than shares of a fund - providing structural advantages over mutual funds with higher minimums and unique benefits.
In other words, an SMA is not a one-size-fits-all type of vehicle. Instead, it is a shiny car built just for you, with every option you desire. It is yours to own, and it even comes with a money manager to drive for you, striving to keep you safe on the bumpiest roads and deliver you to your planned destination. View our risk managed strategies.
1) Customized and Personal - You gain increased control over which assets are in your portfolio and in what proportion. No matter what type of SMA you choose, you will still own the individual investments in your separately managed account. While ETFs and mutual funds have many investors, you are the only investor in an SMA. While the fund (mutual or other) typically owns the assets in fund-based investments, you directly own all assets in your SMA.
You get to know the person managing your money, and they know your goals and ideals, further customizing your investments to match what you value. It’s like ordering a sandwich - “please hold the oil company.” Of course, you can’t request that with a mutual fund, but you can with an SMA.
2) Transparency - When you own a mutual fund, there is a lack of transparency - reporting is only required four times per year. With an SMA, you will always know the individual securities you own, on any day and at any hour. Performance reporting is specific to you.
“At Vineyard Global Advisors, we believe in 100% transparency. We run separately managed accounts, so we think that transparency breeds trust. And trust is essential in this industry.”
3) Tax Flexible - SMAs have more control over when to buy and sell. This makes it possible to manage tax incidence and offset gains strategically. Mutual funds can generate capital gains distributions solely from other fund investors selling shares, meaning that even buy and holders are subject to capital gains taxes in taxable accounts. Additionally, mutual funds are barred from passing net tax-loss harvesting benefits to investors.
PRO TIP: Because SMAs are not bundled investments like an ETF or mutual fund, SMA investors can tax-loss harvest on individual securities.
4) Accessible and Affordable - SMA investors can avoid the sneaky hidden costs of comingled investors in a mutual fund. SMA management fees are competitive with, and often less than, the fees charged by advisors using mutual or ETF funds. Many advisors charge an advisory fee in addition to mutual fund fees, creating many layers of fees. SMA manager fees are often less expensive as they have become more available over the years. The minimums for an SMA are now lower than ever, making them more affordable and easier to access.
SMAs are customized, personalized, transparent, tax efficient, accessible, and affordable. They are, without a doubt, an excellent vehicle for your investments.
Vineyard Global Advisors portfolios are individually constructed to fit your goals:
Vineyard Global Advisors offers 12 fee-only, actively managed, hedged, and long-only investment strategies via separately managed accounts.
Our investment strategies are designed to allow participation in the market's growth within a dynamic, risk-managed framework that seeks to protect against significant market declines. Our goal is to give our clients greater peace of mind by generating steadier returns over time. Contact us to learn more.
