Steve Hillebrecht: What if your investment portfolio was built just for you? Well, by investing through a Separately Managed Account, or SMA, it can be. But how? More details on that in this installment of Lord Abbett Explains: SMAs.

In this video, we’ll dive into two potential benefits of SMAs: customization and tax efficiency.

Customization That Reflects You

Unlike pooled investment vehicles such as mutual funds or exchange-traded funds (ETFs), SMAs allow you to align your investments with your personal goals, values, and preferences. Because you own the individual securities directly, you have greater transparency into what you hold. And you also have more control over how your portfolio is managed.

For example, with equity SMAs, you may be able to exclude specific companies or entire industries from your portfolio. And with certain municipal bond accounts, you can target bonds based on specific credit quality and maturity ranges, or the state in which they were issued, building a portfolio that meets your specific needs. This level of customization simply isn’t possible with traditional pooled vehicles.

Tax Efficiency That Works Smarter

Since you own the underlying securities in your portfolio, not shares of a Fund or ETF, this could help you to take advantage of strategic tax management techniques. For example, with a separately managed account you can employ tax-loss harvesting strategies, helping to allow you to offset gains in other parts of your portfolio, potentially reducing your tax bill. And unlike traditional pooled vehicles, SMAs don’t have scheduled capital gains distributions at year-end. As a result, you have more control over when and how you realize gains or losses, which can potentially allow you to keep more of what you earn.

The Takeaways

The bottom line: SMAs combine the sophistication of professional money management with the flexibility and transparency of direct ownership. For investors seeking a more personalized way to invest˗˗especially those with complex tax situations or specific preferences, SMAs can be a powerful solution.

So, remember: Customization. Tax Efficiency. Control. That’s the SMA experience.

Thanks for watching.

Don’t miss our next episode of Lord Abbett Explains: SMAs where we’ll explore what we believe you should look for in an SMA manager.