SMAs ‘canary in coalmine’ on fees

Mike Taylor

Managing Editor and Publisher

25 June 2026

Separately managed account (SMA) fees can sometimes function as the ‘canary in the coalmine’, according to new research from investment consultancy, bfinance.

The bfinance research into 2026 investment management fees has pointed to the relevance of SMA fees as an indicator, noting that while fees for active global equity pooled funds had broadly stabilised in the 2020s, average fees for SMAs had declined.

It said the median fee for a $100 million SMA is 45 basis points in 2025- 26, down from 50 in 2023-24 (a 10% reduction), with a steeper drop of around 20% at the upper quartile.

“SMA fees can sometimes function as the ‘canary in the coalmine,’ responding more rapidly to competitive pressures since fund managers often have greater discretion to offer bespoke terms,” it said. “Moreover, third-party studies suggest that SMA clients often have a ‘stickier’ profile and stronger likelihood of doing business with other parts of the asset manager’s firm.”

The research noted that recent performance and perceptions of active manager performance remain highly influential in shaping fee trends in public equities.

It said that in the 2010s, the popularity of low-fee ‘smart beta’ was underpinned by an increasingly prevalent argument: that the ‘alpha’ generated by active equity managers could be largely explained by exposure to specific academically-researched risk factors, that these factors could be accessed more cheaply, and (crucially) that they would remain valid going forward.

“Meanwhile, confidence in pure passive investing was buoyed by equity index returns in an era of quantitative easing, coupled with critiques of active manager resilience during
the 2008 crisis.

“In the turbulent twenties, performance is again shaping the competitive landscape – but in new ways. Several of the major academically established ‘risk premia’ have now underperformed over a decade, leading to disappointing results in simpler smart
beta strategies.

Passive global equity indices again posted large gains, this time on the back of a Covid- related liquidity injection and technology stock gains, but investors have grown concerned about over- concentration and valuations that may be increasingly reliant on expected profitability versus realised results. Active global equity managers have also delivered a phase of unusually poor relative performance.”