Equity SMAs & Fee Shifts: A New Landscape
- Equity strategies are increasingly popular within Separate Managed Accounts (smas), according to a new study by Seward & Kissel.
- The study, the firm's fourth annual SMA Snapshot Report, examined trends within the hedge fund sector.
- Currently, equity-focused strategies are used in 69% of all SMAs, a critically important increase from the previous year's 37.5%.
Equity strategies are dominating Separate Managed Accounts (SMAs), signaling a meaningful shift in the investment landscape, revealed in a new report. Established hedge funds continue to maintain a robust presence, while the prevalence of conventional 20% incentive fees is on the rise, according to recent findings. This marks a considerable evolution from previous years, where credit-focused strategies held a larger share, and fee structures were more varied. The study also indicates that the majority of hedge funds managing SMAs have been operating for over five years.Discover how these changes are reshaping the strategies used by investors and the fees they pay. For more insights, explore the details, courtesy of the news from News Directory 3. Discover what’s next for the investment world.
Equity Strategies Rule Separate Managed Accounts Amid Fee Shifts
Updated June 01, 2025
Equity strategies are increasingly popular within Separate Managed Accounts (smas), according to a new study by Seward & Kissel. The law firm’s research indicates a notable shift in incentive fee structures and highlights the continued strength of established hedge funds in the SMA landscape.
The study, the firm’s fourth annual SMA Snapshot Report, examined trends within the hedge fund sector. It revealed that nearly 95% of hedge funds managing SMAs have been operating for more than two years, with over 90% established more than five years ago. only a small fraction,about 5%,are newer managers.
Currently, equity-focused strategies are used in 69% of all SMAs, a critically important increase from the previous year’s 37.5%. Credit-focused strategies, in contrast, have decreased to 23% from 50% in 2023.The remaining 8% is allocated to other hedge fund strategies.
seward & Kissel suggested the shift from credit to equity strategies may reflect increased interest in specific equity areas, such as technology, along with easing inflation that may have reduced credit trade opportunities.
Significant changes were also observed in incentive fees.The percentage of managers charging a standard 20% incentive fee has risen to 73%, up from 25% the previous year.Conversely, the percentage of hedge funds charging no incentive fee has dropped from 50% to just 9%.
The average management fee has decreased from 1.25% to 0.71%. However, 30% of SMA agreements include tiered management fees linked to assets under management (AUM), while 9% of contracts impose no management fee.
What’s next
The trends identified in the report suggest a continued focus on established managers and equity strategies within the SMA sector.Future reports will likely track the evolution of fee structures and the allocation of assets across different hedge fund strategies.