What is a Separately Managed Account (SMA) within a Donor-Advised Fund (DAF)?
SMAs within a DAF offers several key benefits for high-net-worth donors looking to maximize their philanthropic impact while maintaining investment flexibility and potential asset growth.
Customized Investment Management
With an SMA, clients work with their financial advisor to tailor investment strategies within the DAF, aligning with their risk tolerance, time horizon, and philanthropic goals.
Advisor Oversight
An SMA allows financial advisors to continue as the trusted advisor to their clients as they manage the account, ensuring alignment with broader wealth management strategies.
Strategic Grantmaking Flexibility
With an actively managed SMA, clients can implement timing strategies for grants, ensuring they distribute funds when most impactful while allowing investments to grow.
Enhanced Legacy Planning
SMAs within a DAF create a structured way to pass down philanthropic values, enabling future generations to manage and distribute grants based on a well-defined mission.
Why should I choose an SMA for my client?
A BlueTrust advisor may choose to use strategies and/or holdings that are separate from the commingled models offered on the BlueGive platform. This decision often depends on the size of the DAF and the sophistication of the end client or investor.
Sizeable DAFs often correlate to a desire for more control over the investment decisions, so an SMA becomes the preferred option.
Investments in alternatives or other less liquid assets will need active management by an advisor via an SMA.
Increasing popularity in direct indexing via Vident Access Portfolios is only allowed through SMAs.
Active contributors to charities can still use SMAs by effectively maintaining the funds in their Cash Pool.
Other factors can impact the decision to invest in the pooled models or a separately managed account so best practice is to meet with each client to understand their goals and objectives relating to their DAF assets.
How does an Separately Managed Account (SMA) account work within the BlueGive program?
A Separately Managed Account (SMA) within a DAF gives discretionary management oversight to their BlueTrust advisor. Within the BlueGive experience, a client will delegate the day-to-day investment management decisions and implementation of their DAF investment strategy to their advisor, who will manage the SMA outside of the BlueGive platform.
Clients can choose to leave funds in "U.S. Treasuries and Cash" managed by BlueGive for ease of granting purposes. These fits sit in an cash pool under ticker SGOV as noted in the U.S. Treasuries and Cash section in the screenshot above.
How do SMAs differ from commingled models available on BlueGive?
Unless a specific SMA account is opened with GiveClear™, DAF assets on BlueGive are placed into one of several commingled models managed by TIFIN Give as the RIA.
BlueTrust advisors will place their clients into suitable commingled models for their clients that include the Strategic Stock and Strategic Bond portfolios, along with a series of allocation mixes between the two strategies to account for differing levels of risk that a client wants to incur with their DAF assets.
Is there a minimum to open an SMA or to switch a current BlueGive DAF account to an SMA structure?
BlueGive SMAs can be opened with a $50,000 minimum.
How are fees assessed for an SMA?
There is no sub-advisory fee component for SMAs, as the BlueTrust advisor has the option charge an Investment Management Fee outside of BlueGive; however, the DAF admin fee remains the same for SMAs as commingled pools:
60 bps (.60%) annual fee is assessed on held balances for the first $1,000,000.
For all amounts over $1,000,000, BlueGive assesses fees equal to 20 bps (.20%).
For all amounts over $2,500,000, BlueGive assesses fees equal to 10 bps (.10%)
BlueGive does not charge account minimum fees