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Managed Account Assets Are Exploding: Cerulli Associates

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What You Need to Know

  • Managed account assets grew 41.6% in the first quarter from a year ago to a record $9.2 trillion.
  • Industry flows totaled over $202 billion in Q1, including $66.7 billion into UMAs and $24.2 billion into SMAs.
  • Advisors seeking “to deliver a greater degree of customization for their clients” are driving demand for SMA offerings.

Assets in managed accounts are exploding, according to Cerulli Associates.

Its latest U.S. Managed Accounts report shows that assets rebounded 41.6% in the first quarter from a year ago to a record $9.2 trillion as industry flows totaled over $202 billion, the highest level in four years. Cerulli Associates projects managed account assets could hit $10.9 trillion next year.

Assets in separately managed accounts, a subcategory of managed accounts, grew 34% in the first quarter of 2021 compared with the year-ago quarter and almost 43% in the two years ended March 31, 2021, to $1.48 trillion, according to Cerulli. Net cash flows between the second quarter of 2020 and the first quarter of 2021 into SMAs were $24.2 billion.

With separately managed accounts, investors own individual securities rather than mutual funds or ETFs, which provides more flexibility for investment and tax purposes.

During that same period, assets into unified managed accounts (UMAs), which include SMAs, mutual funds and ETFs in a single account, had even stronger growth overall — 68% and almost 80% over two years. Net cash flow between the second quarter of 2020 and first quarter of 2021 were $66.7 billion.

A major driver of the asset growth in SMAs is growing demand by advisors “to deliver a greater degree of customization for their clients,” according to Cerulli. SMAs provide opportunities for advisors to take advantage of tax-loss harvesting of individual assets within clients’ portfolios and to capitalize on other investor trends including investments focused on environmental, social and governance (ESG) factors.

Asset managers, in turn, are introducing more SMAs in order to stay competitive and “one of the best ways to do so is to give advisors and home offices maximum vehicle flexibility,” according to Cerulli.

The report highlights SMA launches from leading asset managers over the past two years, including Fidelity Investments; Putnam Investments; American Century; Aberdeen Standard; WCM Investment Management, an affiliate of Natixis Investment Management; and Voya in partnership with Morningstar.