Key Takeaways
- • According to recent research cited by SS&C Advent, 44% of hedge fund managers have grown their separately managed account (SMA) business over the past two years, while nearly a third launched at least one new fund structure and almost a fifth expanded into new asset classes.
- • Revenue from SMAs may scale with assets, but costs often rise as each customised mandate adds exceptions such as excluded securities, concentration or leverage limits, and bespoke reporting.
- • Account-level restrictions affect trading, allocation, compliance monitoring, reconciliation, accounting and reporting, so the cost of each additional SMA extends well beyond managing that account.
- • Manual reviews and spreadsheet-based monitoring become harder to sustain as guidelines multiply, making automation, standardised processes and embedded controls central to protecting margins.
- • Fragmented systems across portfolio management, trading and compliance increase duplicated effort, reporting delays and operational risk, and the article argues that firms with connected platforms will be better placed to win mandates.
Summary
As hedge fund investors seek greater transparency, control and customisation, demand for separately managed accounts continues to grow. Research cited by Aani Nerlekar, Managing Director of Solutions Management and Sales Engineering at SS&C Advent, shows that 44% of hedge fund managers have grown their SMA business over the past two years. Over the same period, nearly a third launched at least one new fund structure and almost a fifth expanded into new asset classes. The article frames SMAs as an opportunity to attract new investors and grow assets under management, but warns that revenue may scale with assets while costs often rise as exceptions multiply.
In a commingled fund, scale comes largely from repetition, with one strategy, common workflows and a shared reporting framework serving a growing investor pool. SMAs introduce variation: one investor may exclude certain securities, another may impose concentration or leverage limits, and a third may require different reporting or greater portfolio transparency. The article argues that the economics shift when these differences become recurring operational responsibilities. An account-level restriction can shape a portfolio decision, affect trade allocation, require separate compliance monitoring and influence reconciliation, accounting and reporting. As each mandate requires its own workflows, reviews and oversight, operational effort can grow in step with the number of accounts.
The article identifies trading, allocation and compliance as key pressure points. Manual reviews and spreadsheet monitoring may suffice for a limited number of accounts but become harder to sustain as guidelines grow. Managers can reduce the burden by automating workflows, standardising processes where appropriate and embedding controls across the investment lifecycle. Fragmented technology compounds the problem, with portfolio management, trading and compliance often residing on separate platforms and bridged by spreadsheets. The article states this can lead to duplicated effort, reporting delays and operational risk.
The piece concludes that firms investing in scalable technology, robust governance and trusted operating partners will be better positioned to meet allocator expectations and turn operational efficiency into a competitive advantage. The accompanying note on SS&C Advent's Eclipse platform describes a cloud-native system that unifies portfolio management, trading, compliance, operations, accounting and data, with a compliance rule builder covering concentration limits, leverage limits and restricted securities. This is presented as vendor-supplied description of the product rather than independent analysis.
In a commingled fund, scale comes largely from repetition, with one strategy, common workflows and a shared reporting framework serving a growing investor pool. SMAs introduce variation: one investor may exclude certain securities, another may impose concentration or leverage limits, and a third may require different reporting or greater portfolio transparency. The article argues that the economics shift when these differences become recurring operational responsibilities. An account-level restriction can shape a portfolio decision, affect trade allocation, require separate compliance monitoring and influence reconciliation, accounting and reporting. As each mandate requires its own workflows, reviews and oversight, operational effort can grow in step with the number of accounts.
The article identifies trading, allocation and compliance as key pressure points. Manual reviews and spreadsheet monitoring may suffice for a limited number of accounts but become harder to sustain as guidelines grow. Managers can reduce the burden by automating workflows, standardising processes where appropriate and embedding controls across the investment lifecycle. Fragmented technology compounds the problem, with portfolio management, trading and compliance often residing on separate platforms and bridged by spreadsheets. The article states this can lead to duplicated effort, reporting delays and operational risk.
The piece concludes that firms investing in scalable technology, robust governance and trusted operating partners will be better positioned to meet allocator expectations and turn operational efficiency into a competitive advantage. The accompanying note on SS&C Advent's Eclipse platform describes a cloud-native system that unifies portfolio management, trading, compliance, operations, accounting and data, with a compliance rule builder covering concentration limits, leverage limits and restricted securities. This is presented as vendor-supplied description of the product rather than independent analysis.
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