What is a Separately Managed Account (SMA)?

Executive Summary

Separately Managed Account (SMA) 101

Intro

SMAs give investors direct ownership of the securities in their portfolio, providing meaningful advantages like greater control, flexibility, tax efficiency, and the ability to tailor investment strategies to individual goals.

What is a separately managed account (SMA)?

Separately managed accounts (SMAs) are professionally managed investment portfolios designed for individual investors. Unlike mutual funds or exchange-traded funds (ETFs), SMAs allow investors to directly own the underlying securities, such as stocks and bonds. This structure provides significant advantages, including customization, tax efficiency, transparency, and flexibility, making SMAs a viable option for those seeking personalized investment strategies.

What are some of the key benefits of SMAs?

• Direct ownership of securities within the portfolio.
• Customization to align with specific financial goals.
• Tax optimization for greater efficiency.
• Transparency in holdings and transactions.
• Professional management by experienced teams.
• Flexibility and control over investment decisions.

How do SMAs compare to mutual funds and ETFs?

• SMAs offer direct ownership, active management potential, and high levels of customization but typically require higher investment minimums.
• Mutual funds provide access to diverse strategies, no trading costs, and professional management but lack the direct ownership and personalization of SMAs.
• ETFs are known for tax efficiency, intraday tradability, and lower costs, making them accessible to a wide range of investors, however they also lack the direct ownership and personalization of SMAs.

SMAs are a compelling option for investors seeking personalized, tax-efficient, and professionally managed portfolios. However, evaluating individual financial circumstances and goals is essential to determine their suitability.

While they can offer significant advantages, SMAs may not be suitable for everyone due to the potential for higher initial investment requirements. Consulting a financial advisor is recommended to determine whether an SMA aligns with individual investment goals and risk tolerance.

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This material is provided for informational purposes only and is intended for retail distribution in the United States.

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Systematic tax-loss harvesting is a year-round approach to harvesting losses in portfolios by selling certain investments at a loss so that losses can be used to offset gains on the sale of other investments-thereby reducing capital gains tax owed. It aims to capture losses while maintaining a portfolio’s risk profile and relevant diversification parameters. The thresholds for and frequency of systematic tax-loss harvesting depend on market conditions and other factors.

Allspring Global Investments does not provide accounting, legal, or tax advice or investment recommendations.

Unless otherwise stated, Allspring Global Investments (Allspring) is the source of all data (which is current or as of the date stated). Content is provided for informational purposes only. Views, opinions, assumptions, or estimates are not necessarily those of Allspring or their affiliates, and there is no representation regarding their adequacy, accuracy, or completeness. They should not be relied upon and may be subject to change without notice. Any benchmark referenced is for comparison purposes only, unless otherwise specified. Benchmarks are unmanaged and cannot be invested in directly. Benchmarks do not reflect fees or other expenses associated with an actual investment.

The investment process and limitations described in this presentation are intended as an illustration of the manager’s general investment philosophy. Modifications in the portfolio construction guidelines and portfolio limitations are subject to the discretion of the investment manager.

Allspring Managed Account Services is a unit within Allspring that is responsible for the management and administration of the Allspring Funds Management, LLC, retail separately managed account (SMA) portfolios. Allspring Funds Management acts as a discretionary manager for SMAs and as a non-discretionary model provider in a variety of managed account or wrap-fee programs (MA programs) sponsored by third-party investment advisers, broker-dealers, or other financial services firms (collectively, sponsors). When acting as a non-discretionary model provider, Allspring Funds Management’s responsibility is limited to providing non-discretionary investment recommendations (in the form of model portfolios) to the sponsor. The sponsor may use these recommendations in connection with its management of MA program accounts. In these model-based programs, the sponsor serves as the investment manager and maintains trade implementation responsibility.