The growth of separately managed accounts is changing their role in the hedge fund market. Assets invested through SMAs have more than doubled since 2020, reaching $255 billion by 2025, and the structure now represents a growing share of overall hedge fund allocations. Once favored primarily by the largest institutional allocators, SMAs are becoming a more established way for investors to access hedge fund strategies.
Our "Shape of the SMA Market: The Evolution, Economics and Expectations Facing Separately Managed Accounts" report, produced in partnership with Alternative Fund Insight, surveyed 100 hedge fund managers to examine what is driving this shift, how the SMA market is developing and where structural challenges remain. The findings offer a detailed picture of the market's direction and what will be required to sustain its growth.
The Growth Backdrop
The numbers make a clear case for continued expansion. Between 2020 and 2025, the share of global hedge fund assets held through managed accounts rose from 4.7% to 8.2%. SMAs are now offered by three-quarters of hedge fund managers, while a further 18.5% are actively considering doing so. Among new fund launches, nearly half globally now accept SMA allocations at inception.
Managers in our survey are broadly optimistic about the outlook. New mandates are being added at a steady pace, with 69% of managers reporting one to two additions a year. Most expect moderate industry-wide growth over the next three to five years.
Investor demand is helping drive that growth. Greater transparency, control and customization are increasingly important in hedge fund allocations, and the SMA structure can provide all three. Larger institutional allocators are leading adoption, while declining average ticket sizes, from $170 million five years ago to $70 million today, are making the structure accessible to a wider range of managers and investors.
Four Questions Shaping the Market
Four forces are shaping the next phase of SMA growth: continued adoption, demand for transparency, operational complexity and the increasing use of automation.
The SMA market still has room to expand. Managers see continued expansion ahead, with equity strategies expected to lead and North America identified as the strongest regional market. The picture is one of sustained, incremental adoption rather than a sudden spike.
Transparency is emerging as the primary driver of that growth. Investor demand for visibility into positions, risk and performance at the account level is pushing adoption more than any other factor. Technology is making this increasingly practical as improved data infrastructure reduces the operational friction that once made SMAs difficult to manage at scale.
At the same time, operational complexity remains the market's dominant constraint. For 43% of managers, the operational burden and cost of servicing bespoke mandates is the biggest headwind to growth. Technology and infrastructure limitations are a close second. Each managed account can bring its own investment guidelines, counterparties, reporting formats and data flows, multiplying the demands on operations teams as mandate numbers rise.
That is also creating a stronger case for automation. Almost half of respondents are actively piloting AI or automation for SMA operations, and a further 10% have already deployed it. The prospect of scaling bespoke mandates without proportionally increasing headcount or cost is helping drive this shift.
What This Means in Practice
The SMA market is not a single model. It encompasses equity mandates with client-specific restrictions, multi-asset accounts requiring complex allocation and increasingly sophisticated alternative strategies with non-standard data requirements. What connects them is the investor expectation of customization and the operational challenge of delivering it consistently at scale.
For managers, technology and operating model design are becoming essential components of running a competitive SMA business. As programs grow, administrators are expected to broaden their services by integrating data, automating workflows and providing the independent oversight investors require. The ability to support different mandate types at scale while providing timely, consistent reporting will become increasingly important as the market expands.
SS&C's hedge fund administration platform supports both sides of this equation by normalizing data across complex account structures and applying automation where the volume and repetition of managed account operations would otherwise require proportional increases in staff.
Download the "Shape of the SMA Market: The Evolution, Economics and Expectations Facing Separately Managed Accounts" report to explore the survey results, regional trends and economics shaping the SMA market.