An acquisitive wealth manager reels in its first managed acct maker. Boston Private Financial, parent of Boston Private Bank & Trust, is getting into the separately managed account (SMA) business. The Boston-based wealth-management holding company has agreed to buy value-oriented SMA manager Anchor Capital and its sister company Anchor/Russell, a registered investment advisory (RIA) that distributes Russell-sponsored SMAs to affluent investors.

The cash-and-equity deal calls for Boston Private to take an 80% stake in Boston-based Anchor Holdings, a newly created holding company for Anchor Capital and Anchor/Russell. The acquirer will pay around $44 million in cash and stock upfront for 60% of Anchor Holdings, then take the balance in exchange for stock over five years. The total Boston Private ends up paying is contingent on Anchor Holdings reaching certain profit goals through the earn-out period. The remaining 20% will remain with Anchor Capital’s and Anchor/Russell’s managers. The transaction, which is subject to regulatory approval, is expected to close this spring.

“This acquisition immediately gains Boston Private an entree into the [SMA] market segment and provides us with a new national distribution platform,” says Boston Private’s chairman and CEO Timothy Vaill. “The SMA market is one of the fastest growing segments of asset management, with 16-18% annual growth expected over the next few years.”

Managed accounts

The Money Management Institute, a national association of SMA managers and sponsors, says that assets in the space, now verging $700 billion, will hit the $1-trillion mark by the end of the decade. Vaill cites other industry sources that say nearly 20% of all high-net-worth assets are now heading into SMAs.

“High-net-worth” generally refers to households with at least $1 million in assets, not counting their primary residences.

SMAs are single-account, single-style portfolios of investor-owned securities. More loosely defined – especially when talking about the industry’s total assets under management – the term extends to multiple-disciple and unified-managed accounts (UMAs), which combine complementary security styles and, in UMAs, asset classes in a single accounts.

Anchor Capital, which had $4.1 billion in assets under management at the end of December 2005, offers value-oriented balanced, all-cap, mid-cap, small-cap and “smid”-cap styles through its SMA and “Discretionary Management” programs. Its SMAs are distributed by 17 sponsors including Smith Barney, Morgan Stanley, Wells Fargo, Bank of America and