Model Portfolio & SMA Strategists Showcase - Flipbook - Page 27
SMAs & MODEL PORTFOLIOS
SINGLE-ASSET-CLASS VERSUS
BLENDED, AND WHY THAT SPLIT
MATTERS OPERATIONALLY
Some models and SMAs are built
around a single asset class, such as
an equity sleeve or a municipal bond
ladder, designed to be combined with
other holdings the advisor manages
elsewhere or sources from other
strategists. Others are blended, multiasset-class strategies meant to serve
as a complete portfolio on their own.
Number of active ETFs
1,200
Launches
1,000
1,000
800
This distinction connects directly
back to the SMA/UMA choice
discussed earlier (p. 12). A client
being served through several singleasset-class SMAs is, by construction,
someone who needs either a UMA’s
consolidation or a fair amount of
ongoing advisor-side coordination
to keep the pieces working together
as an intended whole. A client in a
single blended strategy has effectively
outsourced the entire asset-allocation
decision to one manager, which
can be entirely appropriate, but is
a meaningfully different scope of
delegation than handing off one sleeve
of a larger, advisor-orchestrated
portfolio.
THE BOUTIQUE SINGLESTRATEGY MANAGER
Everything in this chapter so far has
assumed a strategy built to serve as one
piece of a larger portfolio construction:
core, factor, tactical, single-assetclass, blended. There’s a category that
cuts across all of those distinctions
worth naming on its own, the boutique
manager running one strategy, or a
small handful of related ones, rather than
a diversified shelf of models.
These firms are common in the
SMA world specifically, more than
in the model-portfolio marketplace.
A concentrated high-dividend value
strategy, a quantitative earningsrevision equity strategy, a growth-
platform’s scale naturally dilutes, both
discussed in the due-diligence chapter
(pp. 23–24). Neither of these is a
reason to avoid boutique managers.
Active ETF Launches
vs. Closures
MUNICIPAL & TAX-EXEMPT
BOND SMAs
Fixed-income SMAs deserve their own
word, because the tax-management
conversation in this guide has leaned
heavily on equity direct indexing, and
municipal bond SMAs are one of
the oldest, largest single-asset-class
categories in the entire industry, often
overlooked precisely because they’re
unglamorous relative to newer directindexing products.
603
600
400
350
200
0
2023
2024
2025
Source: Morningstar, “Active ETF Launches
and Closures: 2025 in Review”
and-value equity boutique with a few
decades of institutional history: none of
these firms are trying to be an advisor’s
entire allocation. They’re trying to be
excellent at one thing, and they’re
usually chosen as a satellite holding or
a specific-mandate sleeve rather than a
core allocation.
This matters for two practical reasons.
First, style purity tends to be higher
and more durable at a boutique than
at a diversified platform, precisely
because the firm isn’t managing
dozens of strategies simultaneously.
This is the same trade-off the duediligence framework asks about
elsewhere (pp. 23–24), and it tends to
resolve in the boutique’s favor. Second,
and less favorably, these firms often
carry real capacity constraints and keyperson concentration that a diversified
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It’s a reason to evaluate them with a
due-diligence lens calibrated to what
they actually are, rather than screening
them with the same checklist built for a
multi-strategy shop running dozens of
models.
A municipal bond SMA typically holds
a laddered portfolio of individual taxexempt bonds, actively managed for
credit quality, duration positioning, and
state-specific tax considerations. A
client in a high-tax state often benefits
from an SMA built specifically around
that state’s own municipal issuance,
capturing both the federal and state
tax exemption, something a national
municipal bond fund cannot replicate.
Because the client owns the individual
bonds directly, the manager can also
tailor the ladder’s maturity structure to
a client’s specific cash-flow needs in
a way a pooled municipal bond fund
cannot.
Nuveen is among the largest and
longest-tenured specialists in this
specific category, offering a useful
reference point for what a mature
municipal bond SMA practice looks
like: dedicated credit research, statespecific ladder construction, and, per
the tax-management discussion later
