Single-client hedge funds attract growing share of capital, Goldman report says

Key facts

• Separately managed accounts (SMAs) for individual clients totaled $255 billion at the end of last year, up 20% from 2024.
• SMAs now account for 7.4% of overall industry assets under management.
• Half of all hedge funds run at least one SMA.
• Firms utilizing SMAs delivered higher returns by around 0.4% compared to commingled investors.

The largest multi-manager hedge funds are increasingly allocating capital to accounts exclusively run for individual clients, a trend driven by a scarcity of investment talent and a desire for greater control over investments, according to an internal Goldman Sachs report. These separately managed accounts (SMAs) totaled $255 billion at the end of last year, marking a 20% increase from 2024 and outpacing the growth of the broader hedge fund industry.

SMAs, which allow a single allocator or money manager to run assets, have gained popularity since the 2008 financial crisis by offering investors more control and better fee negotiation capabilities. Goldman Sachs estimates that hedge fund assets managed through SMAs have grown by 13% annually over the past decade, significantly higher than the 5.5% growth seen in the overall hedge fund industry. These accounts now represent 7.4% of total industry assets under management, with half of all hedge funds operating at least one SMA. The report also noted that larger managers, those overseeing more than $5 billion, have seen the greatest growth in running SMAs, likely due to their deeper resources and scalable infrastructure. Firms utilizing SMAs have reportedly delivered approximately 0.4% higher returns compared to investors in commingled funds.