WHAT IS A SEPARATELY MANAGED ACCOUNT?
An SMA is a diversified basket of securities managed by teams of investment professionals. With an SMA, investors have direct ownership of the underlying securities, unlike investing in a mutual fund or exchange-traded fund (ETF), where their money is pooled with that of other investors. This unique structure allows you to tailor the portfolio to your clients’ personal preferences and tax needs.
SMAs are available in a variety of asset classes, styles and risk levels to fulfill different roles within a well-diversified portfolio.
KEY BENEFITS OF SMAs
Enhanced tax management
With an SMA, investors own the underlying stocks or bonds directly and have a cost basis for each security. That gives you more control over realizing capital gains or losses to help reduce taxes and increase after-tax return potential.
SMAs allow investors to establish guidelines for managing investments in line with their personal beliefs and needs. For instance, you could restrict investments in specific companies or direct target income exempt from your client’s state’s taxes.
Many SMAs offer real-time account access showing exactly what is owned and how it’s performing. Investors may also get a clear view of transactions, fees, cost basis and other information needed to monitor progress and manage taxes.
J.P. Morgan SMAs are guided by teams of experienced portfolio managers, analysts and traders. This professional oversight, combined with customization and tax efficiency, provides a level of service once reserved for only large institutions.
COMPARE YOUR INVESTMENT CHOICES
|Separately managed account||Exchange-traded fund||Mutual fund|
|What it is||
|Direct ownership of securities||Yes||No||No|
|Main advantage||Most control over personalizing portfolios and managing taxes||More cost efficiency, liquidity and transparency than other pooled investments||Broadest range of investment strategies, including many not available in other vehicles|
|Funding||Existing securities and/or cash||Cash only||Cash only|
|Diversification||May be limited by account size||Broad, typically hundreds of stocks or bonds||Broad, typically hundreds of stocks or bonds|
|Access to assets||Throughout trading day||Throughout trading day||End of day|
|Minimum investment||Typically $50,000 or more*||Price of one share||Typically $1,000|
|Fees||Typically based on a percentage of account assets||Fund expense ratio, plus possible trading costs||Fund expense ratio, plus possible sales charges|