Customizing a portfolio

A key component of an SMA is that the portfolio manager can tweak the holdings to suit an investor’s personal preferences. For instance, someone might want to avoid a particular industry. If, for example, they already own a generous amount of energy stocks in their overall portfolio, they might decide to limit their exposure to industries related to oil, gas, and consumable fuels so that their overall portfolio isn’t too concentrated in those industries.

You can also elect to remove specific holdings from an account. “Someone might want to buy an SMA but then say, ‘pursue this strategy, but make sure I do not own these 3 particular stocks,'” Mahoney said.

Mutual…