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The Markets March 9, 2011
Managed Account Industry to Shift from SMAs to UMAs
Managed accounts software provider Peridrome found an expected increase in the adoption of models-based
distribution and newer products in a recent survey.
Reported by Rebecca Moore
More than 120 investment managers, sponsors and outsourcers responded to the 2011 Managed Accounts Executive Outlook, and said that the shift away from separately managed accounts (SMAs) will present challenges to SMA managers, but will provide a windfall of opportunity for outsourcers, emerging sponsors and Turnkey Asset Management Programs (TAMPs) that successfully navigate the new business landscape.
The company said traditional SMAs will continue to play a significant role in the managed solutions industry. While sponsors do not expect to increase their traditional SMA assets, only 27% expect their use of these products to decline.
Increased traction of Unified Managed Account (UMA) programs may be driven by large sponsors expanding platforms by adding managers new to managed accounts. Investment managers (IMs) with established SMA products are less likely to see UMA as a growth opportunity than smaller IMs who now can expand into UMA through model delivery without the operational barriers associated with traditional SMA.
According to Peridrome, respondents continue to cite servicing client requests as the least scalable aspect of their operations. Technology will continue to play a vital role as assets shift from traditional SMAs toward models delivery, UMAs and innovative investment vehicles. Existing workflow technologies may not provide enough of an advantage to change this perception.