Separately managed accounts (SMA) have some key differences and advantages to owning units in a managed fund or owning shares directly. Like any class of investment product, separately managed acocunts can vary significantly in the features they offer, so it is important to read the product disclosure statement for full details. Some critical features include:

Transparency
Your separately managed account portfolio can be invested across a number of models within the separately managed account or a single diversified model like the ASX BlueChip20 model. All your holdings are merged so that they are visible in a single portfolio online. The number of models available to invest in depends on the SMA provider.

Portability
Withdrawing from a separately managed account can be done with cash or securities – or a combination of both. You can minimise Capital Gains Tax (CGT) by transferring the stock in-specie from your SMA into your name without selling and realising any capital gains on the stock (some restrictions may apply).

Netting
Netting of transactions is unique to separately managed accounts and eliminates unnecessary trading by offsetting buy and sell trades in a stock so that only the net position is traded. For example 2 model portfolios within the SMA each hold XYZ Company shares, if one model reducing its holding and the other increasing by the same amount this will not result in a transaction.

Blending
Holdings in a number of models can be merged so that they are displayed as a single portfolio for convenient viewing. Blending can also take full advantage of netting during trading time which may provide brokerage cost savings.