Bond investors are increasingly turning to separately managed accounts (SMAs), drawn by their tailored structures and greater control over investment exposure. Unlike commingled funds, SMAs allow institutional clients to directly own a customized portfolio of private credit assets while setting specific guidelines around leverage, risk, and liquidity. 

These accounts have surged in popularity as allocators seek greater transparency, fee flexibility, and alignment with their long-term liabilities. In credit, SMAs offer large investors more say over deal selection, co-investment rights, and sector targeting, often resulting in better economics and stronger governance. 

SMAs—privately negotiated investment vehicles managed by asset managers on behalf of a single client—stand in contrast to pooled funds and are favored by pensions, insurers, and sovereign wealth funds for their bespoke features. 

Finsum: SMAs are becoming a central tool for investors seeking to fine-tune their exposure while capitalizing on an asset class’s yield and downside protection.