A Separately Managed Account, or SMA, is an investment account offered typically by a fund of funds and managed by a money manager. SMAs have varying fee structures.
An SMA is a great tool for traders, investors, and algorithm designers to bridge conception of trading strategy (sandbox) to launch of a hedge fund entity. It is a natural step since it allows you to employ your strategy in the market with fresh money over a full investment cycle (trough to crest to trough) and to build a track record you can market. It takes all the complications of starting a fund out of the equation and allows you to focus on trading the strategy. Funds of funds are more comfortable investing with emerging managers if they have control over the money. Therefore, fundraising is simplified and setting up an SMA is a breeze compared to setting up a hedge fund.
People interested in managing SMAs should start by talking to some of the SMA providers. I have created a list of providers in an open Google document. Feel free to use this information. Also, you are welcome to contribute to the document. You can find the document at http://bit.ly/6Qkr0m.