Separately managed account (SMA) growth has exploded in recent years, with total assets reaching $3.86 trillion in 1Q 2025 (including SMAs within unified managed accounts (UMAs)), resulting in a two-year increase of 54.1%. Despite this, Cerulli has found many managers are experiencing redemption rates that are much higher than expected and, in some cases, higher than those of pooled vehicles, according to the latest Cerulli Edge—U.S. Managed Accounts Edition.

SMAs have garnered significant managed account marketshare due to lower minimums, enabling increased accessibility, and wealth managers’ improved ability to handle trading through model delivery. With solutions such as direct indexing, SMAs provide enhanced tax management and personalization. “The general consensus in the industry is that redemption rates for SMAs would be lower than a pooled vehicle such as an exchanged traded-fund (ETF) or mutual fund,” comments Scott Smith, senior director.

However, Cerulli’s research finds the average redemption rates for equity and fixed-income SMAs to be 21.1% and 15.9%, respectively. While these rates largely are lower than those of mutual funds, 23% of firms say their equity redemption rates are about the same as mutual funds, and 25% say their fixed-income SMA redemption rates match their mutual fund lineup. With just 8% of firms reporting higher redemption rates for their SMAs, it is clear that SMAs are less likely to be redeemed than mutual funds.

“The costs for asset managers to open an SMA (e.g., onboarding, marketing) are not insignificant, and managers expect a client to remain invested in that product for a longer time horizon than they are currently experiencing,” says Smith. “Managers must consider this while building out SMAs, focusing on how and where a product can differentiate to meet advisor demand.

Despite higher-than-expected redemptions, Cerulli believes the vehicle is slated for continued success, as demand for personalization increases and wealth managers seek differentiated offerings to add to their platforms.