Transparency has been the defining promise of the SMA model for years. Allocators pushed for it, managers built for it and the industry invested heavily in the reporting infrastructure to deliver it. Our latest research reveals, however, that gaining access to that transparency and being equipped to use it are two very different things.
The Resource Gap
The most striking finding in the allocator section of our latest report, produced in partnership with Hedgeweek, is the scale of the gap between what allocators have asked for and what they are resourced to handle. Only 28% of allocators describe themselves as fully resourced to process SMA data. In our survey, 39% say they are stretched, 11% actively struggle to process the data they receive and 22% have outsourced the function entirely.
Taken together, nearly three-quarters of allocators are either under-resourced or reliant on external support to manage the transparency they demanded. The operational workload of an SMA program is frequently underestimated, and lean allocator teams face a genuine risk of becoming data-rich but insight-poor.
This creates real tension. Granular position-level data arriving daily has limited value if the team receiving it lacks the capacity to analyze, contextualize and act on it in a timely way. Many allocators engage with their SMA data at an aggregate level rather than drilling into individual trades. What they ultimately want is holistic oversight and the confidence that comes with it, not daily forensic analysis.
Signs of Consolidation
There are early indications that some allocators are reassessing whether the SMA model is the right fit for their circumstances. A mid-sized endowment quoted in the report notes that, as a small team, the operational burden of running SMA relationships has prompted a shift back toward commingled structures. This is not a reversal of the broader trend, as the overall growth data remains positive, but it does reflect a more honest reckoning with what SMA programs actually require.
For managers, this signals that the case for an SMA needs to be made in operational terms, not just in terms of the product's theoretical benefits. If an allocator cannot realistically extract value from the transparency and customization on offer, the cost-benefit calculation shifts.
How Effective Allocators Manage It
The allocators who make SMA programs work are not trying to do everything; they are strategic about where they focus their attention. For some firms, that might mean an approach centered on a small number of decision-relevant use cases, such as risk aggregation, exposure monitoring, liquidity and concentration, with repeatable processes built around each and third-party support deployed where it adds the most value.
The data on outsourcing reflects this pragmatism. Risk reporting and analytics represent the area where allocators most frequently seek external support, cited by 63% of respondents. Data aggregation and normalization (50%) and performance measurement and attribution (50%) follow. Only 19% say they handle everything in-house, underscoring how far the industry has moved toward a model of selective outsourcing rather than a full internal build-out.
When Transparency Delivers
Used well, SMA transparency offers allocators an analytical edge that commingled fund reporting simply cannot match. Position-level data can reveal unintended factor concentrations across a portfolio that would not have been visible from fund-level reporting alone. A finding like that can lead directly to a reduction in allocation, avoiding a macro risk that only became apparent through granular analysis.
This is what effective use of SMA transparency looks like in practice: not monitoring every trade, but rather, having the tools and processes in place to surface the insights that matter. For allocators assessing their own SMA programs, the main concern should be whether they have built the infrastructure to act on it. Providers like SS&C GlobeOp are increasingly central to that infrastructure, offering the reporting, analytics and data normalization capabilities that allow allocators to extract value without building everything internally.
Download the full report to learn more about the effective use of SMA transparency.