For hedge fund managers navigating one of the more difficult fundraising environments in recent memory, separately managed accounts (SMAs) have evolved from a product offering into a practical mechanism for accessing capital that might otherwise be out of reach. In our "Separate Ways II: The SMA Playbook for 2026" report, produced in partnership with Hedgeweek, we surveyed 100 managers and 50 allocators globally to provide a detailed view of how this shift is playing out in practice.
A Market Still Growing, But More Selectively
The headline numbers remain positive. Demand for SMAs increased over the past 12 months for 62% of managers and 60% of allocators, with no respondents on either side reporting a decline. Looking ahead, 78% of managers and 80% of allocators expect the market to grow over the next 12-to-18 months.
However, the character of that growth has changed. Only 9% of managers and 15% of allocators describe demand as having increased significantly. The period of rapid, broad-based adoption appears to be giving way to a more measured phase, in which the question is no longer whether to offer an SMA, but how effectively it can be delivered.
Why SMAs Have Become a Fundraising Tool
Examples from the report clearly illustrate this opportunity. One manager raised $100 million within seven months of launch, with the majority of that capital coming through SMAs. Notably, the firm invested nearly a year in building its technology infrastructure before going to market. This was a deliberate step that enabled it to meet allocator expectations from inception.
The appeal for allocators is straightforward. The SMA structure offers capital efficiency, transparency, and control, which, in turn, enables starting with smaller allocations, building conviction, and scaling exposure as confidence increases. For managers, particularly those without an established track record, this dynamic creates a meaningful opening. Offering an SMA can determine whether a firm secures an initial institutional mandate or is overlooked in favor of a more established competitor.
What Allocators Actually Want
Allocator priorities have shifted meaningfully since last year’s research. Customization has overtaken transparency as the primary driver of SMA interest, cited by 67% of respondents compared to 56% for transparency. Liquidity and control follow at 50%, with fee structures at 44%.
This shift has direct implications for how managers position their SMA offerings. Allocators are no longer seeking visibility alone; they increasingly expect the ability to shape portfolio construction. This includes tailored risk limits, bespoke exclusion lists, specific liquidity terms and leverage parameters aligned with their internal investment guidelines.
There is an important distinction between customization that enhances portfolio outcomes, such as improved risk control, capital efficiency and exposure precision, and customization that is largely cosmetic. The most effective SMA relationships are built around a focused set of clearly defined objectives rather than an open-ended catalog of bespoke requests.
Strategy Fit and Regional Dynamics
Not all strategies translate equally well to an SMA structure. Long/short equity ranks highest for both managers (47%) and allocators (63%), followed by global macro and multi-strategy approaches. Private credit ranks lowest on both sides, reflecting the inherent challenges of applying the SMA model to illiquid strategies.
Regionally, the gap between Europe and North America observed in last year’s research appears to be narrowing. Global investors familiar with the benefits of managed accounts in the US, particularly transparency, customization and control, are increasingly encouraging European managers to adopt similar structures. The Middle East remains one of the most active regions for SMA adoption, particularly among family offices, driven by a hands-on investment culture that aligns naturally with the structure’s emphasis on visibility and control.
The Competitive Imperative
For emerging and mid-sized managers, the data points to a clear conclusion: SMA capability is rapidly becoming a baseline expectation rather than a point of differentiation. Managers that are successfully raising institutional capital in this environment are those that have invested in the infrastructure required to support SMAs and can demonstrate operational readiness before capital-raising discussions begin.
A well-executed SMA offering is no longer a supplementary feature. It is increasingly central to how managers access, win, and retain institutional capital in a more selective market environment.
To learn more about capital raising trends, download the full "Separate Ways II: The SMA Playbook for 2026" report.
