Separately managed accounts are no longer a novelty in the institutional investment landscape. What began as a specialist product offering has grown into a core part of how hedge fund managers raise capital and how allocators construct portfolios. In our "Separate Ways II: The SMA Playbook for 2026" report, produced in partnership with Hedgeweek, we surveyed 100 hedge fund managers and 50 allocators globally to examine precisely where this market stands today. Our research illustrates a maturing industry grappling with the gap between promise and operational reality.
From Growth Story to Execution Story
Last year's iteration of this research documented the rapid rise of SMAs, with adoption rates climbing, investor appetite accelerating and managers scrambling to build out offerings to remain competitive. That growth story has not reversed, but it has fundamentally changed in character.
Our survey shows 60% of allocators and 62% of managers report that SMA demand increased over the past 12 months, and notably, zero respondents on either side reported declining demand. Yet only 9–15% describe that growth as "significant." The explosive adoption phase appears to have given way to something more measured, with steady expansion, operational refinement and a growing awareness that having an SMA offering is no longer enough. Execution and operational maturity are increasingly what separate leading managers from their peers.
This shift has real implications for both sides of the relationship.
The Capital Raising Dimension
For hedge fund managers, particularly emerging and mid-sized firms, SMAs have evolved from a differentiator into something closer to a prerequisite. In a fundraising environment characterized by longer due diligence cycles and more selective allocators, the ability to offer a managed account structure can determine whether a manager wins a mandate or is passed over entirely.
Allocator motivations have also shifted in a noteworthy direction. Our research shows for the first time that customization (67%) has overtaken transparency (56%) as the primary driver of SMA interest. Liquidity and control (50%) and fee structures (44%) follow. What allocators want, in essence, is not simply to see inside a portfolio. They want to shape it.
The Operational Reality Check
Our survey's most striking finding, however, concerns what happens after an allocator gains that transparency. Nearly three-quarters of respondents either lack sufficient internal resources to process SMA data or have outsourced the function entirely. Only 28% describe themselves as fully resourced.
This creates a tension at the heart of the SMA market, where allocators have been pushing for transparency for decades, yet most currently lack the infrastructure to act on it. The result is a risk of becoming data-rich yet insight-poor. The allocators navigating this challenge most successfully are those who have identified a focused set of decision-relevant use cases, built repeatable processes around them and partnered with third-party providers where internal capacity falls short. Risk reporting and analytics (63%), data aggregation (50%) and performance attribution (50%) top the list of functions where external support is most sought.
Infrastructure as Competitive Advantage
For managers, the operational burden is equally real. Customization demands represent the top challenge, cited by 47% of respondents, followed by legal and documentation complexity (37%) and reporting obligations (30%). The managers best positioned to handle these pressures are those who invested in scalable infrastructure, like portfolio management systems, order management systems and reporting engines capable of supporting multiple bespoke mandates, before it became a competitive necessity.
Taken together, these findings suggest that the SMA market has entered a new phase of development. Demand remains strong, but success increasingly depends less on simply offering managed accounts and more on the operational discipline required to support them at scale. For both managers and allocators, the differentiator is no longer access to the structure itself, but the infrastructure and processes that allow it to function effectively.
SS&C delivers the scale, expertise and technology hedge funds need to simplify SMA administration and drive efficiency—without compromising flexibility or control. Download the full "Separate Ways II: The SMA Playbook for 2026" report to learn more about these dynamics.