Model Portfolio & SMA Strategists Showcase - Flipbook - Page 2
SMAs & MODEL PORTFOLIOS
TABLE OF CONTENTS
OVERLAY MANAGEMENT .................................................... 19
What “overlay” means in practice.............................................. 19
Tools versus managers:
A distinction worth taking seriously ........................................... 20
Passive versus active overlay .................................................... 20
Distributed versus centralized decision-making ......................... 21
How an overlay actually decides when to trade......................... 21
Cash management as its own overlay function ......................... 21
Why this chapter matters more than it might seem to ............... 21
HOW TO USE THIS GUIDE...................................................... 4
THE OUTSOURCING DECISION............................................. 5
Why this shift is happening now, specifically ............................... 5
What “the model” actually is ....................................................... 6
What this guide will and won’t do ............................................... 6
ANATOMY OF A MODEL ......................................................... 7
The ownership question comes first............................................ 7
Four ways a model reaches a client account............................... 7
Where the money actually sits today ........................................... 8
What’s changing inside the models themselves .......................... 8
MANAGER DUE DILIGENCE FOR MODELS ........................ 22
Start with what due diligence is actually
protecting against ..................................................................... 22
People: Who’s actually making the decisions ............................ 22
Key-person concentration.................................................... 23
Process: What’s actually repeatable .......................................... 23
Parent: Who actually owns this firm .......................................... 24
Fees: The leg that’s easiest to check
and most often skipped ............................................................ 24
GIPS® compliance: Useful, but narrower than it sounds ............ 24
Building the checklist ................................................................ 25
THE PROVIDER LANDSCAPE, 2026....................................... 9
Off-the-shelf models: A two-tier market ...................................... 9
Custom models: A different competitive set entirely .................. 10
The SMA and direct-indexing side of the ledger ........................ 10
What consolidation means for due diligence ............................. 10
A third sourcing channel: Bank- and
trust-affiliated managers ........................................................... 11
SMA VS. UMA: THE REAL TRADE-OFFS ............................. 12
When a stand-alone SMA is the right call .................................. 12
When a UMA earns its complexity ............................................ 12
The direct-indexing wrinkle ....................................................... 13
Who’s actually building the sleeve ............................................. 13
How billing actually works across the two structures................. 13
A simple decision framework .................................................... 14
STRATEGY TYPES & RISK BUDGETS ................................. 25
Core versus tactical .................................................................. 25
Single-asset-class versus blended, and why that split matters
operationally ............................................................................. 27
The boutique single-strategy manager ...................................... 27
Municipal & tax-exempt bond SMAs ......................................... 27
Risk-on/risk-off overlays and hybrid approaches ....................... 28
Options-income overlays .......................................................... 28
ESG and values-based overlays ............................................... 28
THE TAMP LAYER.................................................................. 14
What a TAMP is, mechanically .................................................. 14
Scale and adoption .................................................................. 14
Evaluating a TAMP’s service quality, not just its model shelf ...... 15
What a TAMP actually solves, and what it doesn’t .................... 15
Where TAMPs are headed ........................................................ 16
Due diligence specific to alternative
investments inside a model....................................................... 16
PERFORMANCE, ATTRIBUTION
& THE ALPHA QUESTION ..................................................... 29
Matching strategy type to client need,
not the other way around.......................................................... 29
Why SMA performance reporting is
structurally different from a mutual fund’s .................................. 29
Reading alpha and risk-adjusted metrics honestly .................... 29
What Morningstar’s own rating research
suggests about this discipline ................................................... 30
The turnover and tax-drag dimension ....................................... 31
A working rule for reading any performance packet .................. 31
MODEL MARKETPLACES & MODELONLY PORTFOLIOS ............................................................... 17
How a model marketplace works ............................................. 17
The catch: Nobody’s watching the account but you ................. 17
How marketplace screening actually works .............................. 18
Open architecture, and why the term
deserves some skepticism........................................................ 18
What to actually evaluate in a marketplace model ..................... 18
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