Key Takeaways
- • Fidelity Investments has converted a temporary pause on new long-short SMA assets (originally instituted December 2025) into an indefinite, ongoing restriction on RIA placement of client capital into these products on its platform, with no stated lift date.
- • The restriction applies only to new asset flows; existing client assets already deployed in long-short SMAs remain unaffected and operational.
- • Long-short SMAs employ combined short and long equity positions designed to minimize tax liabilities through strategic capital loss harvesting and capital gain deferment, addressing a core pain point for high-net-worth taxable investors.
- • Major third-party asset managers including AQR Capital Management and Quantinno Capital Management currently offer long-short strategies on Fidelity's platform, though the total number of available managers and strategies is undisclosed.
- • Fidelity, the RIA industry's second-largest custodian with $5.1 trillion in custodial assets as of Q3 2025, has cited "managing growth of this offering" as the rationale, while competitor Charles Schwab simultaneously announced a partnership with mega-RIA Wealth Enhancement to deploy long-short strategies for concentrated-position clients.
Summary
Fidelity Investments has moved to indefinitely restrict new client assets from entering long-short separately managed accounts (SMAs) on its RIA custody platform, according to sources with direct knowledge of the decision. The restriction represents a conversion of a temporary pause originally implemented in December 2025, which had been extended once and was expected to expire at the end of February 2026. A Fidelity spokesperson declined to comment on the decision but previously stated the firm instituted the pause to "manage growth of this offering on our platform."
The indefinite restriction applies solely to new asset inflows and does not affect existing client capital already deployed in these accounts. Long-short SMAs represent a specialized investment vehicle that combines short and long individual stock positions to address a specific institutional need: minimizing tax liabilities for taxable investors with concentrated positions. These strategies employ capital loss harvesting in underperforming securities while deferring capital gains in outperforming ones, allowing sophisticated investors to reduce tax drag without forced portfolio liquidation—a critical consideration in richly valued equity markets.
Fidelity has offered long-short SMAs through its RIA custody platform for approximately three years. Third-party asset managers including AQR Capital Management and Quantinno Capital Management currently operate long-short strategies within Fidelity's ecosystem, though the precise number of available managers and distinct strategies remains undisclosed. As the RIA industry's second-largest custodian by assets—trailing Charles Schwab with $5.1 trillion in custodial assets as of Q3 2025—Fidelity's decision carries material implications across the RIA channel.
The timing of Fidelity's shift to an indefinite restriction stands in sharp contrast to competitive developments: Charles Schwab recently announced a partnership with mega-RIA Wealth Enhancement to deploy long-short strategies specifically for Schwab clients holding concentrated stock positions. This divergence suggests potential operational, regulatory, or capacity-related constraints at Fidelity rather than diminished market demand for tax-aware long-short solutions. The lack of a publicly communicated timeline for lifting the restriction leaves RIAs dependent on Fidelity's platform without clarity on when they may resume deploying client assets into these tax-efficient vehicles.
The indefinite restriction applies solely to new asset inflows and does not affect existing client capital already deployed in these accounts. Long-short SMAs represent a specialized investment vehicle that combines short and long individual stock positions to address a specific institutional need: minimizing tax liabilities for taxable investors with concentrated positions. These strategies employ capital loss harvesting in underperforming securities while deferring capital gains in outperforming ones, allowing sophisticated investors to reduce tax drag without forced portfolio liquidation—a critical consideration in richly valued equity markets.
Fidelity has offered long-short SMAs through its RIA custody platform for approximately three years. Third-party asset managers including AQR Capital Management and Quantinno Capital Management currently operate long-short strategies within Fidelity's ecosystem, though the precise number of available managers and distinct strategies remains undisclosed. As the RIA industry's second-largest custodian by assets—trailing Charles Schwab with $5.1 trillion in custodial assets as of Q3 2025—Fidelity's decision carries material implications across the RIA channel.
The timing of Fidelity's shift to an indefinite restriction stands in sharp contrast to competitive developments: Charles Schwab recently announced a partnership with mega-RIA Wealth Enhancement to deploy long-short strategies specifically for Schwab clients holding concentrated stock positions. This divergence suggests potential operational, regulatory, or capacity-related constraints at Fidelity rather than diminished market demand for tax-aware long-short solutions. The lack of a publicly communicated timeline for lifting the restriction leaves RIAs dependent on Fidelity's platform without clarity on when they may resume deploying client assets into these tax-efficient vehicles.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.