The separately managed account (SMA) landscape is undergoing a dramatic transformation as institutional investors pivot from basic Bitcoin and Ethereum exposure to sophisticated, yield-generating strategies.
With 59% of institutional investors planning to allocate over 5% of their assets under management to cryptocurrencies in 2025 and 86% either having existing digital asset exposure or planning allocations this year, the SMA structure has emerged as the preferred vehicle for customized institutional crypto strategies.
In today’s newsletter, we will focus on Family Offices and their adoption in the SMA space.
Small Family Offices Leading the Charge in Size and Speed
The family office crypto landscape is experiencing an unprecedented transformation, with 74% of single-family offices now exploring or investing in digital assets - representing a remarkable 21% increase from just 12 months ago.
However, this adoption reveals a fascinating paradox: smaller family offices are outpacing their larger counterparts in crypto enthusiasm, while the implementation through separately managed accounts (SMAs) showcases stark differences in allocation strategies, governance frameworks, and operational sophistication.
Smaller family offices (AUM under $1 billion) are averaging 5% crypto allocations, while larger offices (AUM over $1 billion) are closer to 3%.
More striking is the forward momentum: 51% of smaller offices plan to increase crypto exposure in the next 12 months, compared to only 29% of larger offices.
Geographic Distribution and Cultural Factors
Asian family offices are leading global adoption, with firms like Singapore’s NextGen Digital Venture raising over $100 million for crypto equity vehicles and achieving 375% returns in under two years
European and North American family offices are following different trajectories. 86% of US family offices report being more inclined toward crypto following the 2024 presidential election outcome, while European offices benefit from MiCA’s comprehensive regulatory framework providing standardized compliance across 27 EU states
Operational Challenges and Solutions
Custody and Security Considerations
43% of family offices globally have experienced cyberattacks in the past 24 months, making security protocols paramount for crypto SMA implementation.
Leading family offices are adopting hybrid custody models that combine institutional-grade security with operational flexibility.
The custody landscape offers three primary models for family offices:
1. Third-party custodians providing comprehensive insurance and regulatory compliance
2. Technology service providers offering self-custody infrastructure with institutional controls
3. Hybrid solutions combining elements of both approaches for maximum flexibility
Strategy in Focus
This systematic, fully automated strategy has massively outperformed BTC since early 2022 while maintaining significantly lower drawdowns. It isn’t “low risk” by any means. Volatility is still high, but its risk-adjusted returns (Sharpe, Sortino, Calmar) put it in the top tier of crypto systematic approaches.
It is designed for allocators comfortable with short-term drawdowns in exchange for long-term compounding.
Breakout of the strategy occurred in November 2024 with large explosive moves.
2024 was an exceptional year for the strategy, yet 2025 keeps showing consistent returns.
Performance highlights
Cumulative return: +1567% since Jan 2022 vs BTC’s +129%
CAGR: +115% annualized vs BTC’s +25%
Volatility: 41% vs BTC’s 52% → more stable relative to market beta
Strong risk-adjusted returns
Sharpe (2.07), Sortino (3.71), Calmar (3.92) → very high for the crypto space
Max drawdown: –29.5% vs BTC’s –66.9%
Drawdown duration: 214 days vs BTC’s 769 days
Resilient drawdown management
The underwater curve shows shallower and shorter drawdowns than BTC across the entire period.
Recovery speed is consistent, with no prolonged capital stagnation.
Yearly profile
2022: +57% (BTC deeply negative)
2023: +191% (blockbuster year, capturing major upside trends)
2024: +169% (sustained strong returns, even through volatility)
2025 YTD (Jan–Aug): +36% (positive but more uneven, reflecting chop and reversals)
Quant Space is the largest institutional search engine for systematic trading strategies.
We already have 75+ independent world-class quantitative trading teams signed up, each with vetted track records and unique alpha sources from all over the world.
Our mission is simple: connect institutional capital and allocators directly with best-in-class quant teams, all within a secure Separately Managed Account (SMA) framework.
If you are an allocator active in the SMA space and want access to a curated pipeline of strategies, please get in touch at [email protected].
