The Separate Account Advantage

Ownership structure determines flexibility. Separate accounts provide direct security ownership, tax-lot visibility, and structural customization that pooled vehicles cannot replicate.

Why Structure Matters

1. Direct Ownership

In a separately managed account (SMA), the investor owns each underlying security. In a fund or ETF, the investor owns shares of a pooled vehicle.

2. Tax-Lot Precision

Direct ownership allows harvesting losses at the individual security level, rather than relying solely on ETF-level turnover events.

3. Custom Restrictions

Investors may impose written restrictions on specific securities or industries. Pooled vehicles cannot be customized per investor.

4. Overlay Capability

Long/short overlays, completion portfolios, and dedicated short exposure require structural flexibility not available within traditional fund wrappers.

Separate accounts do not inherently improve performance. They provide structural flexibility. Whether that flexibility is necessary depends on the investors objectives and constraints.

ETF vs Separate Account: Structural Comparison

ETF / Mutual Fund

 Pooled ownership
 Uniform mandate across investors
 Limited tax customization
 No investor-level mandate control

Separate Account

 Direct security ownership
 Investor-level restrictions
 Tax-lot management flexibility
 Mandate-specific overlays possible

Advisory services are provided only pursuant to a written agreement. Not all investors require separate account structures.

Determine Whether Structure Matters in Your Case.

The Structural Audit evaluates whether separate account architecture may be appropriate based on concentration, tax constraints, and mandate alignment.