Separately Managed Accounts Lead Growth
According to the Hearts & Wallets survey of investment products, separately managed accounts (SMAs) and high-yield savings accounts outperformed ETFs for growth from 2020 to 2022. SMAs are a portfolio of securities professionally managed on your behalf, providing diversification, tax optimization, and professional oversight.
For investors who don’t want to pick their own stock investments but still gain broad exposure, SMAs can be an effective solution. It is essential for investors to understand the costs involved while opting for professional management and underlying investments.
There’s almost any kind of ETF you could imagine.
Douglas Boneparth
president of Bone Fide Wealth
High-yield savings accounts have become increasingly popular due to rising inflation and the Federal Reserve increasing rates. These FDIC-insured accounts benefit from high-rate conditions and provide liquidity for investors.
ETFs’ Rising Popularity
Despite not benefiting from high rates, ETFs have become extremely popular due to offering diversification that individual stocks can’t provide. They are also more tax-efficient than mutual funds and can be traded during market hours.
ETFs can now be created with any investment thesis in mind, leading to the emergence of thematic ETFs based on trending themes in the news, which attract a significant amount of investment.
Finding Your Best Investment Product Fit
Investors should consider their investment goals when choosing between SMAs, high-yield savings accounts, and ETFs. High-yield savings accounts are ideal for those seeking liquidity and high interest returns. Meanwhile, SMAs outsource decision-making to professional managers, making them suitable for investors who want to avoid choosing their own investments.
On the other hand, ETFs offer a relatively small amount of money access to a large basket of securities in a tax-efficient way. Consider these factors when making your investment decisions.
Hot Take: Conclusion
In conclusion, the Hearts & Wallets survey highlights the growing popularity of separately managed accounts and high-yield savings accounts as effective investment options. While each product offers unique benefits, it’s essential for investors to align their choice with their specific financial goals and risk tolerance.
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