Model Portfolio & SMA Strategists Showcase - Flipbook - Page 8
SMAs & MODEL PORTFOLIOS
BY THE NUMBERS
$646 billion and
climbing
Third-party model portfolio assets
under advisement: $646 billion as of
March 2025, up 62% in under two years,
more than double mid-2021 levels.
Separately managed account assets
overall: roughly $3.9 trillion, with 15%+
growth projected into 2026. This isn’t a
niche corner of the industry. It’s most of
the industry’s actual practice by now.
model at all. Instead, a dedicated
portfolio manager builds a fully custom
portfolio around a single client’s specific
goals, tax situation, and constraints,
often benchmarked not to a standard
index but to a “personal benchmark”
constructed for that client alone. There
is no published starting point to modify,
as there is with a custom model.
The portfolio is bespoke from inception,
one client at a time. It typically carries
the highest account minimums of
any structure in this guide, often
$1 million or more, reflecting the fact
that each account genuinely requires
individualized portfolio-manager
attention rather than replication of a
shared allocation. Advisors are most
likely to encounter this path through
bank-affiliated or trust-company
managers, discussed further in the next
section (p. 11), rather than through the
TAMP and marketplace channels that
deliver the other three paths.
WHERE THE MONEY
ACTUALLY SITS TODAY
This isn’t a niche corner of the industry
anymore. Third-party model portfolio
assets under advisement reached
roughly $646 billion as of March 2025,
a 62% jump in under two years and
more than double the level from mid2021, according to Morningstar’s
tracking. BlackRock is the largest
Fund vs. Model Portfolio: The Ownership Question
MUTUAL FUND / ETF
MODEL PORTFOLIO (SMA/UMA)
Who owns the securities?
The fund
The investor, directly
Tax events triggered by
Other shareholders’
redemptions
Only trades in the investor’s
own account
Customization
None–fixed basket
Security-level exclusions possible
Ticker symbol
Yes
No–not a tradable security
Transparency into holdings
Periodic disclosure
Full, continuous
single provider of third-party model
portfolios, with roughly $168 billion in
assets, more than double the size of
the next-largest competitor. Separately
managed accounts, the other major
leg of the outsourcing stool, are a
considerably larger pool.
SMA assets are estimated at
$3.9 trillion, with growth of more than
15% projected from 2025 into 2026,
and roughly a third of advisors say they
expect to increase their SMA usage
over the next year.
The two numbers aren’t measuring
quite the same thing. One is “model
portfolio assets under advisement”
tracked through a specific reporting
framework, and the other is total SMA
assets across the industry, including
plenty of accounts that have nothing
to do with model portfolio delivery. But
together they tell you the outsourcing
shift discussed earlier (p. 5) isn’t a
trend advisors are watching from the
sidelines. It’s most of the industry’s
actual practice by now.
WHAT’S CHANGING INSIDE THE
MODELS THEMSELVES
Two shifts are worth understanding
now because they’ll come up
throughout the rest of the guide.
First, the products inside these models
are getting more active. Assets in
third-party model portfolios grew 62%
8
between June 2023 and March 2025,
and active ETFs, which only recently
overtook passive ETFs in overall counts,
are increasingly showing up inside
them, with most new model launches in
early 2025 built primarily around active
funds rather than the passive/active
blends that were common a few years
ago. A model built entirely from index
funds and a model built with meaningful
active security selection are answering
different questions for a client, and the
strategy-types chapter (p. 25) goes into
that distinction in depth.
Second, customization is becoming
table stakes rather than a premium
feature. Custom model portfolios,
off-the-shelf strategies modified for a
specific advisor’s or client’s preferences
through fund substitutions, added asset
classes, or adjusted trading frequency,
WATCH OUT FOR
“Model” doesn’t mean
what it sounds like
A model portfolio has no ticker. It can’t
be bought through a discount broker. It
isn’t a product at all. It’s an instruction
set that gets executed inside a client’s
own account. Advisors new to this space
sometimes go looking for a model’s
“share price” or expect to see it trade.
It won’t. That’s not a bug. It’s the entire
structural point.
