The rapid expansion of separately managed accounts (SMAs) is fundamentally transforming hedge fund distribution, driven by institutional appetite for transparency, control, and bespoke strategies as assets surpass $300 billion in 2025.
Across the hedge fund industry, separately managed accounts (SMAs) have shifted from a bespoke offering for the ultra-wealthy into a mainstream route for institutional allocation, remaking how managers package strategies and how allocators seek transparency, control and talent access. According to a feature in Business Insider, the rapid adoption of SMAs in late 2025 reflects growing demand for daily reporting, trade-level visibility and greater investor voice that commingled structures often lack.
Industry studies and firm filings corroborate the scale and momentum behind the move. A study published by BNY Mellon’s Pershing unit, developed with Greenwich Associates, found that nearly 63% of surveyed institutional investors cited the opportunity to influence SMA strategy and risk management as a primary benefit. The BNP Paribas Hedge Fund Outlook 2025 reports that more than 64% of managers have become more receptive to SMAs than in prior years, with larger managers and mid-sized firms receiving a disproportionate share of SMA inflows.
The structural case for SMAs is visible in asset figures disclosed by market participants. An SEC filing for a large financial institution shows SMAs, including directly managed assets, represented $115 billion of that firm’s assets under management as of 31 March 2025. Industry commentary published on HedgeCo.Net and an Investment Adviser Industry Snapshot for 2025 indicate a widening embrace of SMA wrappers: the Snapshot notes that in 2024 some 73.3% of SEC-registered advisory firms offered asset management through SMAs.
Allocators prize SMAs for more than transparency. Business Insider and other trade reporting highlight liquidity and bespoke control as central drivers: SMAs allow investors to negotiate terms, obtain bespoke exposures, and see position-level reporting that informs governance and oversight. The Pershing/Greenwich research underlines this, showing investor demand for input on investment decisions and risk parameters as a material reason for the shift.
For managers, SMAs offer both opportunity and challenge. Hedge funds are using SMA structures to recruit and retain high-performing portfolio managers who seek autonomy and clear attribution for performance, Business Insider reports. BNP Paribas’ outlook adds that larger firms , those with scale and operations to run customised accounts , have been most successful in converting SMA demand into capital. At the same time, industry coverage warns of evolving fee dynamics: investors pushing for lower management fees, alignment on performance fees and more favourable liquidity terms are forcing firms to adapt product and pricing models.
Operationally, the SMA trend depends on scaling infrastructure. Platform providers and multi-manager operations have invested in technology and custody solutions to deliver daily reporting, reconciliation and tailored compliance across multiple SMA mandates. BlackRock’s guidance on SMA technology highlights the role of scalable systems in making bespoke accounts feasible for institutional volumes. Market participants cited by HedgeCo.Net say platform adoption and improved operational plumbing have helped SMA assets surge by more than 25%, passing $300 billion on some industry aggregation measures in recent years.
The shift is not without risks and unresolved questions. Commentators have raised concerns about “shadow alpha” , the potential for allocators to internalise strategy insights or cherry-pick ideas from externally managed accounts without commensurate compensation , and about the strain customisation places on manager capacity. BNP Paribas and other analysts flag the potential for operational complexity and margin pressure as fee expectations change.
Regulatory and disclosure considerations also matter. SMAs are legally single-client vehicles managed to bespoke mandates, which can alter reporting, compliance and custody arrangements compared with commingled funds, as noted in the SEC filing and industry reporting. Managers and custodians will need to balance bespoke investor requirements with consistent compliance and audit trails as SMA volumes grow.
Taken together, the evidence suggests SMAs are more than a cyclical fad: they represent a substantive re‑engineering of distribution, operational models and manager‑investor interaction across the hedge fund sector. According to the Pershing study and industry reports, the near-term trajectory points to continued growth as allocators prioritise control and transparency and as platforms scale the necessary infrastructure, even as managers navigate fee pressure, capacity constraints and the governance implications of increasingly customised capital.
- https://www.hedgeco.net/news/12/2025/the-sma-gold-rush-custom-accounts-reshape-hedge-fund-allocations.html – Please view link – unable to able to access data
- https://www.prnewswire.com/news-releases/bny-mellons-pershing-units-new-study-reveals-growth-opportunity-for-hedge-fund-managers-within-separately-managed-account-structures-104500504.html – BNY Mellon’s Pershing unit has released a study highlighting the growth opportunities for hedge fund managers within separately managed account (SMA) structures. The study, developed with Greenwich Associates, examines the emergence of SMAs as increasingly popular hedge fund structures and the growth opportunities this trend presents to managers. The study, conducted by Greenwich Associates, is based on detailed interviews with 41 hedge fund and investment managers and 27 leading institutional investors. Highlights of the study include the following: Input on Investment Decisions Drives Investors to SMAs – Nearly 63% of the investors who participated in the survey cited the opportunity to have greater influence on SMA strategy and input in the area of risk management as one of its primary benefits.
- https://www.sec.gov/Archives/edgar/data/1796022/000119312525165449/d903350dars.pdf – This document provides detailed information on the commercial structures offered by a financial institution, including separately managed accounts (SMAs). SMAs are owned by one client and managed according to their specific preferences, integrating a combination of primaries, secondaries, and co-investments across one or more asset classes. SMAs are designed to address clients’ specific portfolio objectives concerning return, risk tolerance, diversification, and liquidity. As of March 31, 2025, SMAs, including directly managed assets, comprised $115 billion of the institution’s assets under management (AUM).
- https://globalmarkets.cib.bnpparibas/app/uploads/sites/4/2025/02/bnpparibas-hf-outlook-2025.pdf – The BNP Paribas 2025 Hedge Fund Outlook report highlights the growing prominence of separately managed accounts (SMAs) in the hedge fund industry. Over 64% of managers noted they have become more receptive to SMAs compared to previous years. Larger managers ($10bn+) and those between $1bn and $5bn reported receiving more capital via SMAs than smaller managers. The report also discusses the structural developments in the hedge fund industry, including the increasing acceptance of SMAs and the evolving fee dynamics.
- https://www.hedgeco.net/news/11/2025/structure-shift-separately-managed-accounts-smas-and-fee-trends-dominate.html – This article discusses the growing prominence of separately managed accounts (SMAs) and evolving fee dynamics in the hedge fund ecosystem. SMAs are increasingly favoured by investors seeking transparency, customization, and control. The article highlights that managers must adapt by offering vintage access (SMAs), co-investment rights, customized terms, and transparent operational practices. It also notes that fee models are evolving, with investors pushing for lower management fees, hurdle rates, performance-fee alignment, and more favourable liquidity.
- https://www.blackrock.com/us/individual/literature/fact-sheet/sma-technology-opportunities-us-en-guidance.pdf – This document provides guidance on separately managed accounts (SMAs) offered by BlackRock. It includes information on technology opportunities, performance data, and investment strategies available through SMAs. The document is intended to assist investors in understanding the SMA offerings and how they can be utilized to meet their investment objectives.
- https://www.investmentadviser.org/wp-content/uploads/2025/05/Snapshot2025.pdf – The Investment Adviser Industry Snapshot 2025 report provides insights into the asset management services provided by SEC-registered advisory firms. In 2024, 73.3% of these firms offered asset management services for individuals and institutions in separately managed accounts (SMAs). The report also highlights the growth in the number of SEC-registered advisers managing private funds and the assets under management in these funds.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The narrative presents recent developments in Separately Managed Accounts (SMAs) within the hedge fund industry, with specific references to late 2025. The earliest known publication date of similar content is October 7, 2025, when BNY Mellon’s Pershing unit released a study highlighting the growth of SMAs. ([prnewswire.com](https://www.prnewswire.com/news-releases/bny-mellons-pershing-units-new-study-reveals-growth-opportunity-for-hedge-fund-managers-within-separately-managed-account-structures-104500504.html?utm_source=openai)) The report also mentions a 2025 Hedge Fund Outlook by BNP Paribas, published in February 2025. ([globalmarkets.cib.bnpparibas](https://globalmarkets.cib.bnpparibas/app/uploads/sites/4/2025/02/bnpparibas-hf-outlook-2025.pdf?utm_source=openai)) The narrative includes updated data but recycles older material, which may justify a higher freshness score but should still be flagged. Additionally, the narrative is republished across low-quality sites or clickbait networks, which raises concerns about its originality. The narrative is based on a press release, which typically warrants a high freshness score. However, the presence of recycled content and republishing across low-quality sites suggests a need for further scrutiny.
Quotes check
Score:
7
Notes:
The narrative includes direct quotes attributed to Business Insider, BNY Mellon’s Pershing unit, and BNP Paribas. The earliest known usage of these quotes is October 7, 2025, in the BNY Mellon press release. ([prnewswire.com](https://www.prnewswire.com/news-releases/bny-mellons-pershing-units-new-study-reveals-growth-opportunity-for-hedge-fund-managers-within-separately-managed-account-structures-104500504.html?utm_source=openai)) The wording of the quotes varies slightly between sources, indicating potential paraphrasing or adaptation. No online matches were found for the exact phrasing used in the narrative, suggesting potential originality or exclusivity. However, the lack of exact matches raises questions about the accuracy and authenticity of the quotes.
Source reliability
Score:
6
Notes:
The narrative originates from HedgeCo.Net, a platform that aggregates content from various sources. While it references reputable organizations like Business Insider, BNY Mellon, and BNP Paribas, the direct source of the narrative is not a widely recognized or verifiable entity. This raises concerns about the reliability and credibility of the information presented.
Plausability check
Score:
7
Notes:
The narrative discusses the growing adoption of SMAs in the hedge fund industry, citing specific figures and studies. The claims align with information from the BNY Mellon press release and BNP Paribas’s Hedge Fund Outlook. ([prnewswire.com](https://www.prnewswire.com/news-releases/bny-mellons-pershing-units-new-study-reveals-growth-opportunity-for-hedge-fund-managers-within-separately-managed-account-structures-104500504.html?utm_source=openai)) However, the narrative lacks supporting detail from other reputable outlets, which is a concern. The language and tone are consistent with industry reporting, and the structure is focused on the topic without excessive or off-topic detail. There are no significant inconsistencies or dramatic tones that would raise immediate red flags.
Overall assessment
Verdict (FAIL, OPEN, PASS): FAIL
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The narrative presents recent developments in the hedge fund industry regarding SMAs, with references to late 2025. While it cites reputable organizations, the direct source is from HedgeCo.Net, a platform that aggregates content from various sources, raising concerns about reliability. The quotes attributed to Business Insider, BNY Mellon’s Pershing unit, and BNP Paribas vary slightly from their original sources, indicating potential paraphrasing or adaptation. The lack of exact matches for the quotes suggests potential originality or exclusivity but also raises questions about accuracy. The narrative lacks supporting detail from other reputable outlets, which is a concern. Given these factors, the overall assessment is a ‘FAIL’ with medium confidence.