SMAs were developed in the 1970s to accommodate accounts and clients who needed to meet specific objectives that did not fit within the constrictions of a mutual fund investment.
It is the freedom of choice of professional managers, portfolio customization, objective investment advice for a set fee, diversification (or concentration should the client choose), tax efficiency and general flexibility that have made SMAs popular among informed investors.
Further, an investor in an SMA typically has the ability to direct the investment manager to sell individual securities with the objective of raising capital gains or losses for tax planning purposes.
According to the State of the Financial Advisory Industry: 2008 report, SMAs are popular picks among advisers at national broker/dealers and wealth managers.
The Times of London reported that separately managed accounts performed much better than mutual funds in 2008,[5] a year when the global stock market lost US$21 trillion in value.
The Wall Street Journal cited top SMA performers including Robinson Value Management Ltd's Market Opportunity Composite Strategy, and PTI Securities & Futures LP's Protected Index Program.