SMAs reach $255bn, Goldman says

Separately managed accounts have emerged as a structurally dominant format within the hedge fund industry, with Goldman Sachs' Prime Insights and Analytics team reporting $255 billion in SMA assets under management by the end of 2025. This figure reflects accelerating adoption, with SMAs expanding 20% year-over-year from 2024 levels and demonstrating consistent outperformance relative to industry growth benchmarks. Over the past decade, SMA assets have compounded at 13% annually compared to 5.5% growth across the broader hedge fund universe, indicating a structural shift in how capital flows through alternative investment platforms.

The proliferation of SMAs reflects both demand-side and supply-side pressures within the hedge fund ecosystem. On the demand side, large institutional allocators—pension funds, sovereign wealth funds, and multi-manager platforms—increasingly favor dedicated account structures that provide transparency, granular control over mandate specifications, and direct fee negotiation capabilities. These advantages prove particularly valuable for institutional investors deploying capital across multiple specialist managers. On the supply side, intensifying competition for experienced investment talent has incentivized hedge fund managers and multi-manager platforms to establish dedicated relationships with allocators and third-party funds, making SMA structures a competitive necessity rather than an optional service offering.

The concentration of SMA adoption among larger hedge fund firms underscores the operational and technological barriers to entry. Goldman found that the proportion of managers with $5 billion or more in assets operating an SMA increased 6% between 2024 and 2025, and these largest firms recorded the most substantial increases in the number of SMAs they manage. This disparity reflects that only firms with sufficient scale, operational infrastructure, and technology platforms can efficiently accommodate multiple dedicated mandates without compromising investment decision-making or portfolio management quality. Approximately half of all hedge funds now operate at least one SMA, indicating mainstream adoption across the industry.

Performance dynamics between SMA and commingled structures warrant institutional attention. Goldman's analysis observed that SMA investors received approximately 0.4 percentage points higher returns than comparable commingled fund investors, though the research firm cautioned against inferring causality from this correlation. The performance differential may reflect selection effects, investor sophistication, or inherent structural advantages rather than the SMA format itself driving outperformance. SMAs now represent 7.4% of total hedge fund assets, positioning the structure as a material segment worthy of continued monitoring by institutional allocators evaluating manager selection and capital deployment strategies.