Providers say demand is accelerating as advisors seek scalable note implementation, but warn that missing data, limited distribution and untested downside performance remain critical blind spots.

The rapid expansion of structured-notes separately managed accounts (SMAs) in the US wealth market took centre stage during a recent SRP webinar, where industry practitioners outlined both the scale of the opportunity and the obstacles still slowing broader adoption.

The growth is coming from firms that already had hundreds of millions under management in structured note SMA - Ed Condon, Structured Insights

According to Edward Condon of Structured Insights, the top 10 SMA providers now oversee close to US$6 billion in structured-notes assets, a dramatic rise for a segment that was a fraction of that size just a decade ago. He added that at least another US$1.5 billion sits with asset managers who currently keep their SMA activity in-house, underscoring how much of the market’s true footprint remains off-the-radar.

Condon, who most recently worked for Halo Investing before starting his own shop, recalled that the segment was worth US$100m back 15 years ago. 

“The growth is coming from firms that already had hundreds of millions under management in structured note SMA,” said Condon. “What we're seeing is an acceleration of growth that now rivals what was happening in the early days of the defined outcome exchange-traded fund (ETF) space. That’s good news.”

Despite all this momentum, he noted “a few headwinds” that need to be addressed, including the lack of centralised SMA strategy database or peer group benchmarking.

Michaelangelo Dooley, principal and portfolio manager at NewEdge Wealth, pointed to the challenge of deploying structured notes advisors tend to face based on his own experience.

The former financial advisor used to invest in structured notes that are historically brokerage-based products with an aim to “bridge the gap” between fixed income and equity to deliver principal protection or downside against equity risk.

“However, as an advisor, there was a lot of complexities in implementing those structured note portfolios,” said Dooley. “They require a lot of manual intervention to both construct, purchase and implement inside of client accounts and even from a client point of view.”

With the industry shift towards advisory, Dooley has seen an influx of these SMAs as they can streamline the experience for clients where advisors don’t have to attest to every single trade but implement structured notes in a scalable format.

Use cases

The portfolio manager currently manages two structured notes SMAs with approximately US$700m in assets, the fourth largest portfolio after Mariner Wealth, Brookstone Capital Management and Goldman Sachs Asset Management, data from Structured Insights shows.

With a track record since 2022, the two strategies, namely SNIP and SNAP, target annual coupon of eight percent to 12%, downside protection of 25% to 35% and eight to 25 structured notes positions.

At Snowwater Investment Partners, Brad Orben is in charge of its Snowwater Managed Income Note Strategy, an SMA with US$155m in assets. As of Q3 2025, the income strategy generated gross return of 7.96%, 8.96% and 11.01% per annum for the last one, two, three years. Since inception, it had a return of 6.62% pa, standard deviation of 4.68% and Sharp ration of 0.7 with a maximum drawdown of -4.45%.

The portfolio sent a caveat about market corrections in today’s relatively bullish environment today.

“What you have to look back to is 1987 and 2007 when the markets dislocated, what is the performance of these [structured] notes and the performance of the SMAs. And that’s really where I think that advisors need to focus their efforts in terms of performance in the down markets,” said Orben.

The wider adoption of structured notes by institutional investors has also given rise to the market expansion.

“If you look at endowments, foundations, pensions, they are actively engaging and aligning themselves with structured note strategies on a customized basis in all three of those areas,” he said, comparing to a decade ago when few knew where to put a structured note in terms of asset allocation.

Meanwhile, Dooley added that the structured notes space is still “in its infancy” relative to ETFs, mutual funds and traditional SMAs. “Access to structured notes SMAs remains challenging as they often go through multiple third-party providers.”

There’s also growing demand for unified managed accounts (UMAs) where multiple SMAs are blended into one strategy. “The technology still needs to be built to allow structured note managers inside of these platforms,” said Dooley. “Those are not easy things to build.”

An easier access is in fact one of the key drivers of the increasing popularity for outcome defined ETFs.

“I would hope that we cannibalize those. For investors that have more sizable sums of money and have the ability to access [structured notes SMAs], they should not, in my opinion, be leveraging things like defined outcome ETFs,” said Dooley, adding that the management fees for the two types of strategies are similar while SMAs feature full life cycle management and higher level of customisation.

Click the link to access the webinar.

Image/ Adobe Stock

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