Analysts at leading SMA technology provider DeskTrading are estimating that investments deployed through Separately Managed Accounts will double by 2023. The innovative, Hong Kong-based platform provider predicts that SMAs, which have remained a more uncommon investment method since their introduction in the 1970s, will be increasingly utilized over the next three years across many global financial markets, with a particular focus on the rapidly growing Forex marketplace.
This predicted growth is understood to be the direct result of a notable growing interest in SMAs by Forex traders, with demand growth for SMAs in the retail FX market standing at around 20% since 2017. DeskTrading analysts believe that a desire to invest through institutional means will be a key driver of growth, with institutional managers typically demonstrating greater successes in the FX market and edging closer and closer to FX-focussed Separately Managed Accounts for their investors and traders.
“We know there are a number of options available in the retail FX market, including Percentage Allocation Money Management and Multi Account Manager accounts, but these lack the features that modern investors are looking for,” says Steve Wong, Head of Trading at DeskTrading. “At a time when there is increasing demand for transparency and customisation from investors and traders, it’s natural that investment platforms which offer these benefits will continue to show signs of growth.”
“Investing with an FX-based SMA provides greater control over the portfolio and, with a low barrier for entry, Separately Managed Accounts are increasingly accessible.”
While investors and traders have shown a preference for mutual funds in the past, it appears that these investment methods are falling out of favour, with SMA/UMA annual growth rate exceeding the net sales growth rate of mutual funds since 2016. Similarly, it has been reported that manager confidence in SMAs is continuing to rise, with more than 20% of planners already using Separately Managed Accounts confirming they will continue to do so; up from just 17% 5 years ago.
The SMA model offers a wide range of benefits for investors and traders that are typically not seen with other options. Transparency is one of the biggest benefits, providing investors with a comprehensive overview of their portfolio, while customisation offers investors greater control over how their portfolio is managed. These benefits combine to thrust SMAs to the forefront of the financial markets, with growth expected to double within the next three years.