When you invest in a pooled fund, you share the same portfolio with every other investor. You own shares of a fund, not the bonds themselves. You often have no say in what gets bought, sold, or held. And when the fund manager makes a tax decision, it affects everyone equally, regardless of your personal situation.
A separately managed account, or SMA, works differently. You own the individual securities outright, in your own name. Your portfolio manager builds a portfolio around your specific goals, tax needs, and risk tolerance. This structure can offer you a level of flexibility that most pooled vehicles cannot match.
For fixed income investors in particular, that flexibility matters. Tax situations vary by state. Income needs differ by household. Duration preferences depend on your time horizon. An SMA can be designed to account for all of these individual concerns.
One Oak Capital Management, LLC, a New York-based SEC-registered investment adviser founded in 2013, has built its SMA strategies around this principle. The firm provides fixed income SMA portfolios that are personalized, addressing specific client goals and tax considerations.
In a mutual fund or ETF, one manager makes decisions for all shareholders. If that manager sells a bond at a gain, every investor in the fund shares the tax consequence. If the fund holds bonds from states that do not benefit your tax return, you still own a share of those bonds. You cannot request changes.
An SMA removes these constraints. Because you own the bonds directly, your portfolio manager can make decisions specific to your account. This means your manager can sell one bond to harvest a tax loss in your portfolio without affecting any other investor. Your manager can target bonds from your home state to maximize your tax-exempt income. Your manager can adjust the duration of your holdings to match your cash flow needs.
This direct ownership also affects liquidity. In a pooled fund, you redeem shares. In an SMA, you hold individual securities that can be sold on the open market. You can also custody your bonds at any custodian of your choice, giving you additional control over where your assets are held.4
We have observed that tax efficiency is one of the strongest reasons investors choose SMAs over pooled vehicles, especially in the municipal bond market.
Municipal bond interest is generally exempt from federal income tax. In many cases, it is also exempt from state and local taxes if you hold bonds issued within your state of residence. An SMA allows your portfolio manager to focus your holdings on in-state bonds, maximizing your after-tax income in a way that a national municipal bond fund cannot.
One Oak Capital Management, LLC designs its laddered municipal bond strategies to optimize individual tax efficiency, taking into account state-level nuances and continuous tax management. The firm's SMA portfolios can be tailored to individual state requirements, desired duration, and income, ensuring full customization.
Tax-loss harvesting is another advantage. When a bond in your portfolio declines in value, your manager can sell it to realize a loss, offsetting gains elsewhere in your investment accounts. The firm has executed tax-harvesting trades for its Enhanced Municipal Portfolio and Enhanced Taxable Municipal Portfolio, helping investors manage their annual tax obligations more effectively.
(Disclaimer: Any discussion of tax matters contained within this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or applicable state, local, or national tax law provisions; or (ii) promoting, marketing, or recommending to another party any transaction or tax-related matter addressed herein. Tax laws and regulations are complex and subject to change. The impact of a particular tax strategy will vary based on an individual investor's financial situation, investment portfolio, tax bracket, and other factors. Investors must consult with qualified tax professionals regarding their specific circumstances before implementing any tax strategy discussed in these materials.)
This level of individualized tax management is not available in a mutual fund. In a pooled structure, the fund manager cannot harvest losses for one investor without affecting all the others.
An SMA provides complete transparency. You see every bond in your portfolio. You know the credit rating, maturity, yield, and issuer of each security. You can review your portfolio at any time and understand exactly where your money is invested.
This transparency extends to risk management. One Oak Capital Management, LLC applies a disciplined risk management framework across its SMA portfolios. The firm manages duration to control interest rate sensitivity. It diversifies across sector and issuer to reduce credit risk. It monitors the credit rating of the portfolio, specific sectors, and individual securities on an ongoing basis. It also analyzes the marketability of each security in the portfolio for its ability to offer ongoing liquidity.
(Disclaimer: There can be no assurance that risk mitigation efforts will be successful or that the risk of loss can be prevented by such efforts.)
The investment team at One Oak Capital Management, LLC uses Bloomberg, Fabkom, and research from multiple sell-side firms to support these decisions. This data-driven approach means your portfolio is monitored continuously, not reviewed once a quarter.
One Oak Capital Management, LLC offers three distinct SMA strategies, each designed for different investor objectives.
The Enhanced Municipal Portfolio is a laddered, actively managed strategy that focuses on high credit quality investment-grade municipal bonds. It is designed for investors seeking tax-advantaged income. The portfolio earned a five-star Morningstar Rating and received Zephyr's PSN Top Gun award for having a Top 10 return for the three-year and five-year periods ending September 30, 2025, in the PSN Municipal Universe.
(Disclaimer: References made to awards/rankings are not an endorsement by any third party to invest with One Oak and are not indicative of future performance. Investors should not rely on awards/rankings for any purpose and should conduct their own review prior to investing. Zephyr/PSN is an asset and wealth management software marketed by Informa (LSE: INF). PSN is a database of Separately Managed Accounts managed by Zephyr. One Oak does not compensate Zephyr for inclusion in the PSN database, nor does it compensate Zephyr for consideration for, or awarding of, the PSN Top Gun designation. The Morningstar Rating for Funds, often called the Star Rating, is a data-driven rating that measures the past performance of a fund in comparison to peers. One Oak has purchased the Morningstar Basics Package, which grants One Oak the permission to feature its Morningstar Rating in marketing materials. This purchase, renewed on an annual basis, has a value of $6,885.06.)
The Enhanced Taxable Municipal Portfolio combines municipal bonds with corporate bond exposure. It seeks a combination of attractive taxable income and total return through diverse, high credit quality bonds. This strategy also received multiple PSN Top Gun awards, including a Top 10 return for the one-year, three-year, and five-year periods in the PSN Municipal and Intermediate Maturity Universes.
(Disclaimer: References made to awards/rankings are not an endorsement by any third party to invest with One Oak and are not indicative of future performance. Investors should not rely on awards/rankings for any purpose and should conduct their own review prior to investing. Zephyr/PSN is an asset and wealth management software marketed by Informa (LSE: INF). PSN is a database of Separately Managed Accounts managed by Zephyr. One Oak does not compensate Zephyr for inclusion in the PSN database, nor does it compensate Zephyr for consideration for, or awarding of, the PSN Top Gun designation.)
The Enhanced Short-Duration Municipal Portfolio targets investors seeking low volatility and attractive tax-advantaged yields. It uses a laddered approach with short-duration, high credit quality bonds for investors who want total return and tax-advantaged income with less interest rate sensitivity.
Across all three strategies, the portfolios consist of investment-grade bonds with active management and continuous credit monitoring. Each portfolio can be tailored to national or single-state holdings, giving you direct control over your geographic exposure. The firm's SMA approach provides investors with transparency, liquidity, and control over their portfolios. (Disclaimer: Bond ratings, which typically range from AAA/Aaa (highest) to D (lowest), are assigned by credit rating agencies such as Standard & Poor's, Moody's and/or Fitch, as an indication of an issuer's creditworthiness.)
Stephen DiTursi, CEO and Chief Investment Officer, oversees portfolio risk management across the firm with 40 years of industry experience. Neil Crabb, Senior Portfolio Manager, leads the firm's municipal research process and trading systems. Together with portfolio managers James Kim, Keith Cronin, and Michael DiTursi, the team identifies value-based opportunities within the U.S. municipal and corporate bond markets.
Joseph Marren, Head of Research, oversees the firm's research strategy across all sectors and asset classes. His background includes senior roles in mergers and acquisitions at Citigroup, Credit Suisse, and Donaldson, Lufkin & Jenrette, adding depth to the firm's analytical capabilities.
SMAs can be well-suited for several types of investors.
High-net-worth individuals can benefit from the tax customization. If you live in a high-tax state like New York or California, an SMA can target in-state municipal bonds to reduce your federal and state tax liability simultaneously. This is something a pooled municipal bond fund cannot do with the same precision.
(Disclaimer: Any discussion of tax matters contained within this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or applicable state, local, or national tax law provisions; or (ii) promoting, marketing, or recommending to another party any transaction or tax-related matter addressed herein. Tax laws and regulations are complex and subject to change. The impact of a particular tax strategy will vary based on an individual investor's financial situation, investment portfolio, tax bracket, and other factors. Investors must consult with qualified tax professionals regarding their specific circumstances before implementing any tax strategy discussed in these materials. )
Retirees and income-focused investors can benefit from the ability to structure a laddered bond portfolio with staggered maturities. This can create predictable cash flow at regular intervals, matching your income needs over time.
Institutional investors, trusts, estates, and endowments can benefit from the transparency and control. You can set specific investment guidelines, restrict certain sectors or issuers, and review every holding in the portfolio at any time.
Registered investment advisers who manage client assets can also use SMAs to deliver personalized fixed income solutions. Each client account receives its own portfolio, tailored to that client's specific situation.
One Oak Capital Management, LLC provides investment advisory services to individuals, high-net-worth individuals, trusts, estates, endowments, charitable organizations, corporations, and other investment advisers through its SMA platform.
If you want to learn more about how a separately managed account can be structured around your specific goals, visit One Oak Capital Management, LLC's SMA strategies page or contact the firm directly to request a portfolio assessment.
The firm also publishes ongoing market insights with quarterly commentary on portfolio construction and fixed income market conditions.
Past performance is not representative of future return performance. Fixed income risks include, but are not limited to, changes in interest rates, liquidity, credit quality, volatility, and duration. To invest with One Oak Capital Management, LLC, you must be a qualified or accredited investor.
(Disclaimer: There can be no assurance that One Oak will implement its investment strategy or that it will lead to investor returns. Actual results may vary materially and adversely.)
