The next level of customization in Separately Managed Accounts
What is Personalized Managed Accounts (PMA)?
Every investor’s needs and preferences are unique. And as wealth grows, so do expectations and complexity—like tax management and environmental, social and governance (ESG) considerations. Yet the level of personalization and customization required to meet each client’s distinct goals can quickly send a practice into disarray.
That’s where Personalized Managed Accounts comes in. PMA is a distinctive solution tailored to investors’ unique and specific needs, featuring:
- Separately managed accounts
- Custom overlay services (e.g., tax management and ESG considerations)
- Personalized transition management
The benefits of PMA
PMA gives you and your clients access to an investing approach that leverages Russell Investments’ extensive investment manager research, selection and monitoring process. This process is our trademark, forming the cornerstone of our advice to global institutional investors for more than 50 years.
But it doesn’t stop there. Now, through PMA, investors have access to the next level of a customized separate account solution that is built entirely around their unique needs. PMA lets you personalize the portfolio at the individual account and securities levels.
PMA empowers you to:
Access a robust toolkit of tax-managed overlay services designed to maximize after-tax wealth
Choose among a variety of environmental, social and governance (ESG) exclusion and overlay options
Develop an optimal transition plan of current assets customized to your tax circumstances and preferences
Diversify a concentrated stock position
Select or exclude individual securities based on personal preferences, objectives or constraints
Pair with other asset class portfolios to create a total portfolio that meets your risk objective
Achieve all of this while leveraging the Russell Investments partnership to implement Personalized Managed Accounts seamlessly and with little effort on your part.
Use our investor-friendly brochure to help explain the benefits of Personalized Managed Accounts to your clients.
Read our blog post for a quick refresher on the pros and cons of separately managed accounts (SMAs), plus a potential solution for today’s investors: Personalized Managed Accounts.
Explore the SMAs at the foundation of Personalized Managed Accounts
Depending on your goals and preferences, select one or a combination of our Separately Managed Accounts to form the foundation for your personalized portfolio. Then customize your portfolio with the features that best reflect your goals, circumstances and preferences.
Personalized DI All Cap SMA Overview | Fact Sheet 
Personalized DI Large Cap SMA Overview | Fact Sheet
Personalized DI Large Cap Growth SMA Overview
Personalized DI Large Cap Value SMA Overview
Personalized DI International SMA Overview
Personalized Large Cap SMA Overview | Fact Sheet
Personalized Small/Mid Cap SMA Overview | Fact Sheet
Personalized International SMA Overview | Fact Sheet
Personalized Core Equity SMA
The percentages represent the target allocation as of 8/11/2022 and may change in the future.
Personalized DI Core Equity SMA
The percentages represent the target allocation as of 6/1/2022 and may change in the future.
PMA gives you flexibility and choice
Add custom overlay and exclusion services: These can be added to your Personalized Separately Managed Accounts to provide a truly active approach offering flexibility and a higher level of customization.
Steer your portfolio in the right direction.
Build around your needs.
You have beliefs, either faith-based or ESG preferences, that may lean you toward or away from specific types of companies. With Personalized Managed Accounts, you can restrict purchases to those stocks, industries and categories in your customized portfolio.
You own restricted stock or equity options. Personalized Managed Accounts allows you to limit additional ownership in the company or industry.
You have a concentrated stock position with a low-cost basis and want to avoid triggering significant capital gains if you sold it. With Personalized Managed Accounts you can build around this position or transition out of it over time while minimizing the tax.
Centralized
- Trading
- Implementation
Year-around tax management
- Tax-loss harvesting
- Wash sale minimization
- Tax smart turnover
- Holding period
Dedicated team
- Investment professionals focused on maximizing your after-tax outcome
Transition accounts easily and efficiently
Our transition management is customized to your client's personal preferences and makes it easy for you to transition your client's current assets to PMA in a tax-efficient manner. Through our custom transition analysis report, we can develop an optimal transition plan customized to each of your clients’ tax preferences and circumstances.
Our Consultative Review process entails:
Provide your client’s existing holding information to the Russell Investments' PMA Service Team.
- Client’s name
- Holding information per lot (ticker, date acquired, number of shares, and cost basis per share)
- Target PMA model strategy (optional)
- Short-term capital gains tax rate
- Long-term capital gains tax rate
- ESG constraints (if any)
- Stock restrictions (if any)
- Tax budget (if any)
- Short-term capital gains budget (if any)
- Long-term capital gains budget (if any)
Your Russell Investments team will develop a custom transition proposal with you to take into account all your client’s individual tax preferences and circumstances.
Depending on the target SMA, transition options can include a time-period (immediate, 3- or 5-years), tax, or capital gains budget approach.
A Tax-Budget transition approach is available for: both Personalized Core Equity SMA solutions, and all Personalized DI SMAs. The Timeline approach is available for all Personalized SMA solutions.
Choose the optimal transition for your client and complete the PMA Account Onboarding steps.
Additional related materials
Notice:
* Managers listed above are current as of 8/8/2023. Russell Investment Management, LLC (“RIM”) selects the money managers and optimizes the portfolio utilizing quantitative and/or rules-based processes. RIM’s portfolio construction process seeks to achieve the desired level of concentration, appropriate risk management, and exposure to strategic and tactical sources of excess return intended to meet the separately managed accounts investment objective over a market cycle. These money managers are unaffiliated with RIM and have non-discretionary asset management assignments pursuant to which they provide a model portfolio to RIM representing their investment recommendations. RIM may change portfolio asset allocation at any time, including not allocating portfolio assets to one or more money manager strategies.
†The S&P 500® Index is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and has been licensed for use by Russell Investments. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Russell Investments. The Personalized DI Large Cap SMA is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 Index.
Frequently Asked Questions for Personalized Managed Accounts (PMA)
Separately Managed Account (SMA)
What is a Separately Managed Account (SMA)?
A portfolio of securities managed by an investment firm on an investor’s behalf, offering customization and direct ownership of securities.
What are the benefits of using SMAs for investors?
SMAs provide customization, personalized portfolios, the ability to exclude specific companies or sectors, and potential tax efficiency.
How do SMAs differ from mutual funds or ETFs?
Unlike mutual funds or ETFs, SMAs offer direct ownership of securities, customized selection of stocks, greater transparency and the potential for tactical tax-loss harvesting.
What are some reasons why investors choose SMAs over other investment options?
Some investors choose SMAs for customization, flexibility, higher-level tax management, alignment with personal values or preferences, and the ability to directly own individual securities.
How can SMAs help investors minimize their tax liability?
The individual ownership of securities in SMAs allows for tactical tax-loss harvesting, which can offset gains in the account or other parts of the portfolio, potentially reducing the investor’s tax liability.
Give an example of how SMAs can be used to meet an investor’s customization requirements.
An advisor used an SMA for a client who wanted to exclude oil and gas companies from their portfolio due to environmental concerns, providing a customized solution aligned with the client's values.
How can SMAs help investors diversify a concentrated stock position?
SMAs, particularly those incorporating Direct Indexing, can efficiently and tax-smartly reduce a concentrated stock position, mitigating the risk associated with holding a large percentage of one or a few company's stock.
What are the drawbacks of managing SMAs without the right tools?
Without proper tools, managing SMAs can involve manual entry, frequent monitoring, complex trading activities, and challenges in handling security restrictions and tax management effectively.
How can partnering with a firm like Russell Investments help financial advisors implement SMAs more effectively?
Partnering with a firm like Russell Investments provides access to Personalized Managed Accounts (PMA), offering professional portfolio management, customization, tax management, and seamless implementation, allowing advisors to focus on client relationships.
Direct Indexing
What investment challenges can Direct Indexing help solve?
Direct Indexing can help solve investment challenges such as the need to manage taxes or the requirement to impose certain restrictions,
How does Direct Indexing in Separately Managed Accounts differ from commingled product options like mutual funds and ETFS in terms of tax efficiency?
Direct Indexing in Separately Managed Accounts allows for more tax efficiency because investors can selectively harvest tax losses from individual securities, then use those tax losses to offset gains in other areas of their portfolio. In commingled product options, tax loss harvesting depends on overall market performance and the losses are owned by the fund or ETF.
How does Direct Indexing differ from mutual funds and ETFs in terms of personalization?
Direct Indexing offers greater personalization compared to mutual funds and ETFs by allowing investors to directly own individual securities tailored to their specific investment preferences and goals.
How can Direct Indexing help mitigate the tax impact of reducing a concentrated stock position?
Direct Indexing can allow investors to offset capital gains from selling a concentrated stock position with capital losses generated from other securities held in the portfolio, helping minimize the tax implications.
What are some challenges investors face reducing a concentrated stock position?
Investors may hold an emotional attachment to the stock or may face potential tax implications, as the original cost of the shares could be significantly lower than the current price, leading to a large capital gain and subsequent tax bill.
What benefits does Direct Indexing provide in managing tax implications for future taxable events?
Direct Indexing’s ability to utilize individual losses on stocks not only helps manage current tax liabilities but may also provide the flexibility to offset future taxable events, such as the sale of a business, property, or stocks and bonds.
Why is it beneficial to plan for future financial windfalls by using Direct Indexing SMAs and generating tax losses over time?
Planning for financial windfalls by utilizing Direct Index SMAs and generating tax losses over time helps the investor build tax “assets” that can be used in the future to offset the tax liability of the windfall. This could provide significant tax savings for the investor and potentially better overall outcomes.
Transition Analysis
How can a transition analysis help investors when repositioning their portfolios?
A transition analysis can provide investors with a structured plan to migrate from a concentrated or unmanaged portfolio to a customized and diversified investment strategy, such as a separately managed account (SMA), while managing the related tax burden.
What are the two approaches to transitioning a portfolio in a tax-efficient manner?
The two approaches to tax-efficiently transitioning a portfolio are the timeline approach, which controls the length of time over which the transition occurs, and the tax-budget approach, which sets an annual budget for capital gains taxes generated by the transition.
How can a transition analysis assist investors in making decisions about their portfolio transition?
A transition analysis can present the actual tax consequences and tracking error values derived from different transition methods, helping investors choose an approach that aligns with their preferences regarding risk and tax implications.
What is the purpose of assessing tracking error when repositioning a portfolio?
Assessing tracking error helps determine the potential performance deviation between the investor’s portfolio and the targeted benchmark, aiding in the decision-making process during the transition.
How can a tax-managed transition help investors with concentrated or unmanaged portfolios?
A tax-managed transition, utilizing a separately managed account (SMA), allows investors to migrate their concentrated or unmanaged portfolios to a customized and diversified investment strategy, while minimizing the related tax burden.
What role can financial professionals play in guiding investors through portfolio transitions?
Financial professionals can provide valuable guidance by presenting options, performing transition analyses, assessing tax implications and helping investors make informed decisions with their risk tolerance and tax preferences.
Customization, Values- and Faith-Based Investing, and Charitable Giving
What are some customization options that investors may seek when it comes to their investment portfolios?
Whether you need to restrict certain securities or industries due to existing business interests, or you are looking to apply values-based preferences, the Personalized Managed Accounts program can accommodate your personalization needs, while monitoring the portfolio to ensure it is aligned with your appropriate risk and return profile.
What advantage does the Personalized Managed Accounts program offer in terms of customization?
The Personalized Managed Accounts program, including direct indexing strategies, allows investors to customize their equity portfolio based on their investment goals and beliefs, such as ESG, socially responsible investing (SRI) or specific themes like Catholic Values, Environmental Impact, or Human Rights & Social impact.
The program empowers investors to add investment exclusions in the following way:
The program empowers investors to add investment exclusions in the following way:
| CUSTOM RESTRICTIONS | ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)-BASED RESTRICTIONS |
| You provide a list of securities to exclude based on your requirements. For example:
|
Exclusionary Categories
|
How can offering a portfolio aligned with clients' values differentiate financial advisors?
By offering the option for clients to select a portfolio that supports their values, financial advisors can differentiate themselves from their peers and guide clients to invest in a way that aligns with their individual beliefs.
How does the PMA program support charitable giving?
Charitable giving through the PMA program enables investors to gain tax efficiency while supporting causes aligned with their beliefs. This allows an investor to donate individual stocks that fit the charity’s focus and principles.
PMA
How can Personalized Managed Accounts (PMA) enhance customization and tax management?
PMA, offered by Russell Investments, provides a comprehensive solution for implementing customization, tax management, risk balancing, preference screens, and year-round monitoring, relieving investors and advisors of implementation stress.
How does the Personalized Managed Accounts (PMA) program work?
Our PMA program is a distinctive solution tailored to an investors’ unique and specific needs featuring: separately managed accounts (SMAs); custom overlay services such as tax management and ESG considerations, and personalized transition management to address embedded gains and other portfolio transition needs.
Depending on an investor’s goals and preferences, one, or a combination of our SMAs offered through the PMA program will form the foundation of the investor’s personalized portfolio. Then select one or multiple features to customize the portfolio to best reflect unique needs or select from a list of pre-defined exclusions.
Depending on an investor’s goals and preferences, one, or a combination of our SMAs offered through the PMA program will form the foundation of the investor’s personalized portfolio. Then select one or multiple features to customize the portfolio to best reflect unique needs or select from a list of pre-defined exclusions.
What types of separately managed accounts are offered through the PMA program?
We offer Direct-Indexed, Active and Core Equity separately managed accounts (SMAs).
What are the advantages of the PMA program?
Our PMA program provides advisors and their clients with the flexibility to tailor each solution to their individual needs. That could include:
- Maximizing after-tax wealth
- Aligning values-based preferences with investments
- Diversifying a concentrated stock position
- Limiting purchases in stocks or industries already owned
- Developing an optimal tax-efficient transition plan
How to choose the best investment strategy under the PMA program?
If you are an investor, contact your financial professional. If you are an advisor, contact your Russell Investments Sales Team.
Why choose Russell Investments for Personalized Managed Accounts?
At Russell Investments, we've been a leader in investment innovation since the firm's founding in 1936. Our PMA program gives financial professionals and their clients access to an investing approach that leverages Russell Investments' extensive investment manager research, selection and monitoring process. The program is a distinctive suite of solutions for financial advisors and their clients that can be customized to each investor’s unique and specific needs.
Our PMA program leverages the best that Russell Investments has to offer. It features a dedicated team of portfolio managers, quantitative research analysts and service teams, centralized trading and implementation, as well as automated year-round tax management capabilities, including tax-loss harvesting, wash-sale minimization, tax-smart turnover and holding-period management. Ultimately, these customized SMAs will help clients meet their desired outcomes by minimizing the impact of taxes and transaction costs while maintaining tracking error to a target portfolio. We leverage technology to help investors achieve growth and optimal after-tax outcomes.
Our PMA program leverages the best that Russell Investments has to offer. It features a dedicated team of portfolio managers, quantitative research analysts and service teams, centralized trading and implementation, as well as automated year-round tax management capabilities, including tax-loss harvesting, wash-sale minimization, tax-smart turnover and holding-period management. Ultimately, these customized SMAs will help clients meet their desired outcomes by minimizing the impact of taxes and transaction costs while maintaining tracking error to a target portfolio. We leverage technology to help investors achieve growth and optimal after-tax outcomes.