Demand for SMAs rises among investors

Demand for separately managed accounts (SMAs) for money market investing has risen among institutional investors according to fund manager JP Morgan Asset Management.

The asset manager said SMAs in global liquidity have increased by 203% since the height of the credit crisis, and now account for 19% of the $538 billion held in money market funds globally. It attributed the increased demand to the threat of negative yields, greater regulation and a greater understanding of securitised assets. It said that by using SMAs, investors had reduced the impact of regulation and enjoy more flexible investment choices.

JP Morgan AM client portfolio manager in the global liquidity group, Jason Straker, said: “The investment landscape has changed significantly since the 2008 crisis, and institutional investors are not only adapting in order to accommodate these changes through the use of separately managed accounts but are also becoming more confident in doing so.

SMAs give investors legal ownership of the underlying securities held in a money market fund, giving them more control over risk and greater flexibility over fees, both of which are important to investors, Straker said. He added: “The true value of separately managed accounts is the ability for an investor to be much more flexible in the investments they choose, therefore picking stronger-yielding investments that some money market funds are not able to offer in this current low yield environment.”