The Best US Large-Cap Equity SMAs

Investor and advisor interest in separately managed accounts is surging. While mutual funds, exchange-traded funds, as well as individual stocks and bonds still dominate advisor platforms, SMAs are closing the gap. In Morningstar’s upcoming 2025 Voice of the Advisor, more than 55% of surveyed advisors report offering SMAs to clients.

How SMAs Differ From Mutual Funds and ETFs

SMAs can provide several advantages that pooled vehicles can’t match. Like mutual funds and ETFs, they provide access to professional money managers, but the structure changes everything.

With an SMA, investors own the underlying securities directly, not shares of a pooled fund. That means real-time visibility into holdings and greater control. Investors can exclude specific securities (or sectors) and manage concentrated positions. SMAs also enable tax-loss harvesting and avoid the embedded capital gains that can plague some mutual funds.

Fees can be another plus, though there are caveats. SMA management fees are typically lower and negotiable, often tiered, so larger accounts pay less. But additional layers—such as advisory, administrative, and operational fees—can erode that advantage over pooled vehicles, which charge a single, bundled expense ratio. As such, it’s critical to understand the all-in cost before investing.

The trade-off for SMAs’ benefits? Higher minimum investments and structural limitations. While investors can invest as little as a few hundred dollars in a mutual fund (or buy just one share of an ETF), SMAs often require $100,000 or more, making them better suited for higher-net-worth investors. But given that SMA investors own the underlying securities directly, there are constraints on portfolio diversification. For example, portfolios with well over 100 holdings are likely to be better implemented via pooled vehicles.

There are also geographic constraints. SMAs are generally restricted to US-listed securities, which can limit their usefulness if investing abroad. To work around this, many international (and global) equity SMAs invest in American depositary receipts, which allow US investors to access foreign companies without trading on overseas exchanges. However, only the largest foreign firms tend to offer ADRs, significantly restricting the investment universe.

The exhibit below shows how various aspects of mutual funds, ETFs, and SMAs differ from one another.

Morningstar Expands SMA Coverage

Morningstar has responded to growing interest in SMAs by vastly expanding its qualitative coverage. About three years ago, fewer than 100 equity SMAs were under analyst coverage, but that number quintupled to more than 500 as of the end of August 2025. Most of these SMAs are substantially similar to their mutual fund or ETF counterparts, sharing the same team, process, and portfolios. That means investors can choose the right vehicle for their needs without sacrificing quality.

Morningstar’s Best Large-Cap Equity SMAs

See below for a list of the best large-cap active equity SMAs under qualitative coverage. For a full understanding of each strategy, be sure to read its accompanying analyst report. Investors can also run screens on Morningstar’s entire separate account database in Morningstar Direct.

Harris US Large Value, which closely resembles its mutual fund counterpart Oakmark OANMX, is a great large-value Morningstar Category option. A seasoned team anchored by renowned investor Bill Nygren runs the strategy. The managers’ disciplined approach targets cheap large-cap stocks with strong management and the ability to grow per-share value faster than the market. It earns High People and Process Pillar ratings.

Within large blend, JPMorgan US Equity-MA stands out for its strong leadership under Scott Davis and the backing of JPMorgan’s huge analytical resources. A recent Process upgrade to High from Above Average here (and on the corresponding mutual fund JPMorgan US Equity JUESX) reflects greater conviction in its portfolio construction.

A top large-growth option is Principal Aligned SMA Blue Chip Equity. Manager Bill Nolin, who also runs Principal Blue Chip PBCKX, underpins the strategy’s High People Pillar rating, though he has a strong supporting cast, too. The philosophy is simple yet powerful: back owner-operators—or management teams who think and act like owners—to drive long-term success.