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Separately managed accounts (SMAs) are gaining increasing traction in the hedge fund industry. Nearly half of hedge fund managers now offer SMAs, with an additional 10% planning to implement them within the next 12 months. This growth is driven by regulatory pressures, investor demands for transparency and technological advancements. Larger funds, particularly those with assets under management (AUM) exceeding £10bn, are more likely to offer SMAs (Hedgeweek 2025 Investor Survey).

Larger funds are substantially more likely to offer SMAs. According to Hedgeweek 2025 Investor Survey, all surveyed funds with over £10bn AUM offer SMAs, compared to just 40% of funds under £25m. This correlation highlights the operational capacity and resource requirements needed to manage separate accounts effectively.

Addressing the Challenges

Managing SMAs is a complex undertaking, especially for hedge fund managers. With the mounting need for customization, strong risk oversight and operational efficiency, the role of SMA managers has become increasingly complex. From data consolidation to performance tracking, managers face numerous operational hurdles.

The middle office plays a crucial role in tying front-office decisions with back-office processes, covering trade support to compliance monitoring. Automation and modern infrastructure bridge operational silos, ensuring smooth workflows, real-time risk management and accurate performance measurement. Shadow services maintain independent records alongside primary service providers, adding scrutiny to the processes.

Why Data Consistency is Non-Negotiable for SMAs

Data fragmentation is one of the most pressing concerns in managing SMAs. Financial data often comes from multiple sources, making it prone to inconsistencies and inaccuracies. With SMAs requiring highly tailored investment strategies, even the slightest data discrepancy can disrupt client objectives. Centralizing data into a single source ensures consistency, accuracy and better oversight. Beyond operational efficiency, centralized data enhances compliance and decision-making.

Benefits of a Unified Data Source for SMA Management:

• Improved Accuracy: Avoid errors by working with consistent, consolidated datasets.
• Risk Mitigation: Better data oversight minimizes potential risks across client portfolios.
• Enhanced Performance Reporting: Accurate data enables precise tracking and reporting of SMA outcomes.
• Operational Efficiency: Streamlined workflows mean less manual effort and more seamless organization.

For SMA managers, having a single source of truth facilitates greater alignment with client goals, reduces errors and ensures reliable data underpins every decision.

Bridging the Gaps with Efficient Middle-Office Operations

Middle-office operations are a critical component of effective SMA management, serving as a bridge between the front and back office. However, many companies still rely on outdated systems and manual processes, slowing down operations and increasing risk.

Effective middle-office operations bridge operational silos with automation and modern infrastructure.

Positive benefits of effective Middle Office Solutions:

• Risk Management – Minimizes operational risk by ensuring trades are booked correctly, confirmed with the counterparties, timely market settlement and reconciled cash and positions against custody records. Having trade certainty shortly after execution enables portfolio managers to better view their positions and associated market and liquidity risk.
• Regulatory and Compliance Reporting – Accurate trade and position data is essential for ensuring correct and timely reporting to local regulators. Incorrect positions could lead to internal compliance breaches and incorrect margin calls issued by Counterparties.

Clients who operate single fund structures typically perform some form of shadow accounting to ensure that positions, valuations, P&L and NAV calculated by the fund administrator are acceptable. However, where managers run SMA structures, this adds an additional layer of operational burden and complexity due to the number of 3^rd parties they would need to integrate with to ingest data and reconcile.

Benefits of Third-Party Administrators for SMAs:

• Independent Verification – Shadow accounting offers a secondary level of verification of positions, market values and portfolio accounting data against third-party administrators. This added layer of control helps verify the accuracy of data within the primary accounting systems.
• Investor Confidence – Demonstrates to investors that managers have a robust risk framework to detect any anomalies that would otherwise go undetected. This ultimately leads to greater trust and credibility.
• Fee Verification – Typically, the primary fund administrator would calculate management and performance fees. A shadow process enables managers to cross-check management and performance fees.
• Compliance – Up-to-date, validated data simplifies adherence to regulatory standards.

Ultimately, managing SMAs without shadow services can leave blind spots in oversight.

Scalability Through Data and Technology

Driving additional alpha remains key for hedge fund managers. Informed decision-making is critical, especially when managing complex SMA portfolios. But this is easier said than done in the face of fragmented data and disparate systems.

AI, analytics and advanced algorithms are transforming how hedge fund managers approach SMAs. By leveraging technology, managers can consolidate data from multiple platforms, gain insights into trading strategies and refine portfolio performance.

How Tech Elevates SMA Management:

• Portfolio Transparency: Use consolidated dashboards to track real-time performance across multiple accounts.
• Risk Reduction: Real-time data reduces portfolio volatility and equips managers to handle dynamic market conditions.
• Informed Decisions: Analytics tools drive insights through accurate, multidimensional data analysis.

Elevating SMA Management with SS&C GlobeOp

The growth of SMAs represents a fundamental shift in how sophisticated investors approach alternative investments. Investors increasingly demanding transparency, control, customization and capital efficiency. This trend is particularly pronounced among larger, more established managers, but is rapidly spreading to mid-sized firms, as technological solutions reduce the operational burden of managing multiple separate accounts.

For investors, SMAs offer tailored exposure to hedge fund strategies with enhanced control and transparency, significantly improving overall portfolio management. The era of growth for SMAs appears set to continue as technology advances further reduce operational friction and investors become more sophisticated in leveraging these benefits.

Effective SMA management requires more than investment acumen. It demands precision, transparency and powerful operational infrastructure. From managing data across portfolios to reconciling accounts with advanced shadow services, hedge fund managers must address increasing complexity.

This is where SS&C GlobeOp delivers immense value. Our tools and expertise help hedge fund managers operate with agility and confidence, letting them focus on what they do best—securing exceptional results for their clients.

Reach out to discover how SS&C GlobeOp can optimize your SMA operations.