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Why Separately Managed Accounts Beat Pooled Funds for Algorithmic Trading

Separately managed accounts eliminate custody risk and counterparty exposure that pooled funds create. Learn why SMAs are superior for automated trading.

by Vinzenz Richard Ulrich

Pooled funds made sense when humans were placing the trades.

Now they're just structural risk you don't need.


The Pooled Fund Model Is Outdated

The traditional fund structure was built for manual trading.

You wire capital into a pooled vehicle. Sign away custody. Wait for quarterly statements.

This made sense for human portfolio managers. It makes zero sense for algorithmic trading.


Separately Managed Accounts (SMAs) Eliminate Custody Risk

Your capital stays in your brokerage account under your name.

We execute trading strategies through limited authorization. But we cannot withdraw funds. Ever.

You maintain full custody. autotradelab handles execution.

No redemption queues. No counterparty exposure. Instant revocation anytime.


Algorithmic Trading Makes SMAs Scalable

Human traders can't manage thousands of individual accounts with precision.

Automated algorithms can.

We run systematic strategies across client accounts simultaneously with zero execution degradation.

You see every trade live through your dashboard. Not monthly summaries. Raw data, real-time.


The Bottom Line

Pooled funds create unnecessary risks:

  • Custody and counterparty exposure
  • Lock-up periods and redemption restrictions
  • Limited transparency

SMAs eliminate all of this:

  • You maintain custody always
  • Instant authorization revocation
  • Real-time trade visibility
  • Zero withdrawal counterparty risk

Custody isn't a feature. It's the foundation.

Modern algorithmic trading demands better infrastructure.