The team at a fundster-supporting consulting firm predict big growth in the separately managed account side of the asset management business.

"FUSE projects that total SMA assets will top $5.1 trillion by 2026, reflecting a 15.4% CAGR over 2025 and 2026," states Mario Favetta, relationship manager at Fuse Research Network. That's up from $2.088 trillion in 2020, $2.533 trillion in 2021, $2.357 trillion in 2022, $2.958 trillion in 2025, and an estimated $3.884 trillion at the end of 2024.

"We expect SMAs to grow not only in AUM but also in sophistication as well," Favetta writes to MFWire:

For example, SMA managers will be providing more options-related strategies as overlays to SMA vehicles. We also expect to see inclusion of SMAs into more complex allocation strategies, often delivered in a UMA structure. Plus, more effective tax strategies are already being integrated through direct indexing capabilities and that innovation will continue as well.

Favetta offers insights into where all this SMA growth is coming from.

"Recent trends in SMA growth have been supported by rising demand for tax management and personalization," Favetta states. "Moreover, technological advancements have lowered investment minimums and increased model delivery efficiency, expanding the addressable market for SMA vehicles."

This SMA boom is good news fundsters on the active side of the space.

"Advisors who choose active strategies are likely to allocate through an SMA," Favetta states.

As with other areas of the business, differentiation can be key.

"Looking further out, the added complexity of SMA offerings will introduce a new dimension of differentiation for both platform sponsors and asset managers," Favetta writes. "Performance will continue to be crucial, but advisors also attach importance to levels of personalization, service, and other less tangible factors." 

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