Robert Leggett, Executive Director, Morgan Stanley, who is a firm believer in SMAs, in an article in iTreasurer says, “Separately managed accounts continue to be a solution considered as a way to offset the changing liquidity landscape and the ongoing low interest rate environment.” 

The important article then reviews how a SMA can help in managing corporate liquidity but first corporates need to accurately their cashflows before they embark on a SMA programme.

Key considerations for SMA implementation

It is important to consider these implementation steps:

1. Clearly define your firm's risk expectations
2. Understand the financial statement impacts of your new SMA strategy.
3. Evaluate how the rating agencies will view the shift in strategy
4. Evaluate the internal resources available to manage the SMA program.

As Leggett concludes, “The challenges of carving out the initial time to develop the SMA strategy and educate senior management and the board of directors on the merits of the strategy can be time-consuming, but based on input from TIMPG members, the benefit of having an SMA program far outweigh the initial challenges of implementing this type of strategy.”

Read more in the full article here. Recommended.

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CTMfile take: A clear explanation of the opportunities AND the problems of SMA programmes.