Welcome to....

Order Currently Published Books by the Author

Type of Securities Investment Strategies Fundamental Analysis Technical Analysis
Bank Savings Equity Instruments Bonds Treasury Securities Government Agencies Derivatives Funds Annuities


 - Mutual Funds

 - Index Funds

 - Closed-End Funds (CEFs)

 - Exchange Traded Funds

 - Hedge Funds

 - Separately Managed Accounts




Separately Managed Accounts (SMAs)

Separately (individually) managed accounts represent customized portfolio management for a fee. The money managers/brokers are given discretion to trade in your account, with the goal of tailoring your investments to your circumstances.

This is an attractive and valid investment approach, especially for high net worth and high income investors who trust their financial advisors.  

Merits of Separately Managed Accounts:

  • Selective Investing - Investors can restrict the selection of investments to conform to their unique preferences. For instance, if one feels “tasering” is inhumane, he can ask for Taser to be excluded as an investment choice. This is in contrast to mutual funds, where you have no input whatsoever, as to the securities owned by the fund.
  • Tax Management - SMAs are attractive to investors needing individual tax management assistance. Account executives focus on maximizing portfolio values by, among many techniques:
    • Matching aggregated capital gains with capital losses.
    • Pushing back sales dates, where possible, to convert short-term gains to long-term capital gains.
    • Avoiding “wash sale” situations.
    • Acting as tax coordinators among various independent managers.

Tax management is a big advantage, especially for those investors who are accustomed to the tax drawbacks of mutual funds, where you have no control over the realization, and amount, of capital gains and losses. It’s not uncommon, to have to report capital gains on your tax return, based on a fund that has declined in value.

SMAs can help investors avoid some of the tax traps of investing.     

  • Access to Professional Portfolio Managers – Your account can be subdivided out and managed by sector or style specialists. Even with mutual fund investing, the market is saturated with so many choices, that it takes a skilled investment professional to identify the best.

Weaknesses of Separately Managed Accounts:

  • Expensive – Typically, firms get 1 to 2 % or more, plus additional costs, if mutual funds are involved.
  • High Minimum Balances – Technology has lowered the minimum balances required. Minimum portfolio balances for SMAs used to range from a quarter million, to over a million dollars. Companies are lowering the minimums, but tax and investment issues can be complex, and if the balances are not high enough, they’re just not profitable. Small balance accounts may not get the proper attention.
  • Diversification - Investors with low balances may not have adequate diversification.
  • After-Tax Performance Statistics Are Unavailable – Since after-tax returns are not widely tracked, they may not be reliable. Yet, one of the key benefits being marketed is assistance on minimizing portfolio generated taxes. The jury is still out on the effectiveness of separately managed accounts.

Professionally managed accounts are a very attractive investment approach. You, however, need to be comfortable with the managers, their backgrounds, track records, and credentials.


Need a Financial Advisor ? Business & Franchising Opportunities Featured
Made It ?
Spend It !
Risks, Uncertainties and Disclosures


Donations - Help Keep This Site Free!


| Home | Getting Started | Bank Savings | Equity Instruments | Bonds | Treasury Securities | Agency Securities | Derivatives |
| Funds | Annuities | Value Investing | Growth Investing | Income Investing  | Market Capitalization Strategy
| Momentum Investing | Technical Investing | Buy and Hold Strategy | Buy What You Know | Contrarian Investing | Turnaround Investing |
| Tobin’s Q | Responsible Investing | ADR's  | Global Investing Strategy | The Dow Theory  |  Odd-Lot Theory  |
| Election Cycle Theory  | Dow Dividend Theory | Penny Stocks | IPOs | Dollar Cost Averaging | Drips | Risk Tolerance  |
| Introduction to Fundamental Analysis | Income Statement Analysis | Balance Sheet Analysis | Cash Flow Analysis |
| Shareholders’ Equity Analysis | Ratios and Definitions | Technical Analysis | Type of Charts | Chart Reading | Oscillators |
| Chart Overlays | Chart Patterns | Elliot Wave Theory | Spinella Heart Rate Theory | Fibonacci | The Envelope System |
| Time Value of Money | Exchanges | IndexesAsset Allocation | Retirement Savings | Site Map |

Click here: To save on ordering any of "The Chestnut and Cedar Stock Report's" books.