Josh Brown has launched a new separately managed account strategy betting that investors are ready to move beyond passive index funds. The new offering, named after a premium steak cut, reflects Brown's conviction that active stock picking still has a place alongside traditional buy-and-hold investing.
Brown's strategy targets what he identifies as the market's best opportunities rather than mirroring broad market indexes. This contrasts with the dominant trend of the past decade, which has pushed billions into low-cost index funds tracking the S&P 500 and other benchmarks.
The separately managed account structure gives Brown flexibility to tailor holdings to individual investor circumstances. Unlike mutual funds that pool money from thousands of investors, SMAs allow managers to customize positions, manage taxes more efficiently, and make real-time adjustments based on market conditions.
This move reflects a broader debate in wealth management. Index fund advocates note that most active managers underperform their benchmarks after fees over long periods. Yet some investors still believe skilled managers can identify pockets of opportunity the market misprices.
Brown's launch targets a specific client segment willing to pay for active management. These investors likely have substantial assets and want more than generic market exposure. They're seeking conviction-driven stock selection and personalized service that self-directed index investing doesn't provide.
The separately managed account market remains attractive for advisors like Brown. SMAs allow managers to charge meaningful fees while maintaining direct relationships with clients. As wealth consolidates among high-net-worth individuals, demand for customized strategies continues.
Whether Brown's momentum-focused approach outperforms will depend on execution and market conditions. His track record matters, but past performance never guarantees future results. Investors considering such strategies should weigh higher fees against the potential for outperformance, plus the risk of underperformance in certain market environments.