{
  "id": 18150294,
  "title": "The Economics of SMAs: How hedge funds can scale customised mandates profitably",
  "url": "https://urgent.news/2026/11/04/the-economics-of-smas-how-hedge-funds-can-scale-customised-mandates",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-11-04T16:44:00.000Z",
  "source": {
    "name": "Hedgeweek",
    "slug": "hedgeweek",
    "url": "https://hedgeweek.com/news/the-economics-of-smas-how-hedge-funds-can-scale-customised-mandates-profitably"
  },
  "original_language": "en",
  "account": "Hedge funds are increasingly offering Separately Managed Accounts (SMAs) to attract new investors and grow assets under management. However, customised mandates create operational challenges as exceptions multiply. While revenue may scale with assets, costs often rise due to increased exceptions. Hedge funds must balance providing customisation with maintaining efficiency and profitability.\n\nThe core issue is whether firms can scale SMA offerings without proportionally increasing operational complexity. Traditional commingled funds benefit from scale through repetition, but SMAs introduce variation that erodes this efficiency. Each investor may have unique requirements like securities exclusions, concentration limits, reporting needs, and greater transparency. These differences translate into additional operational responsibilities that affect portfolio decisions, trade allocation, compliance monitoring, and reconciliation.\n\nCoordinating these variations across the investment lifecycle requires significant coordination between teams. Account-level restrictions can influence portfolio construction, trade allocation, compliance, and reporting. Each mandate demands its own workflows, reviews, and oversight. Operational effort grows in lockstep with the number of accounts, creating a challenge for hedge fund managers to make customisation repeatable.\n\nOperational scalability becomes a competitive advantage. Trading and allocation processes can move from portfolio construction to execution and allocation while maintaining account-specific restrictions. Compliance can be streamlined by automating workflows and embedding controls throughout the lifecycle. However, fragmented technology can exacerbate the cost of scaling SMAs. Inconsistent systems create duplicated effort, reporting delays, and operational risk. A unified, cloud-native platform that integrates portfolio management, trading, compliance, operations, accounting, and data is essential.\n\nFor hedge fund leaders, the key question is whether the business can support the next wave of customisation without multiplying the effort required to manage it. Investing in scalable technology, robust governance, and trusted operating partners will enable firms to meet allocator expectations, navigate growing complexity, and turn operational efficiency into a competitive advantage.",
  "summary": "As hedge funds pursue growth, they face a fundamental question: can they serve more customised investor mandates while staying efficient enough for that growth to be profitable? By Aani Nerlekar, Managing Director, Solutions Management and Sales Engineering at SS&C Advent As investors seek greater transparency, control and customisation, demand for separately managed accounts (SMAs) continues to…",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}