Separate Accounts and Mutual Funds in Asset Management
44 Pages Posted: 12 Jul 2021 Last revised: 14 Aug 2021
Date Written: August 2021
Separate account investors outperform category-matched mutual fund investors yearly by 14─24 bps gross and 50─75 bps net. This outperformance is entirely explained by structural and reporting differences between the vehicles and by size differences between investors. Controlling for the average outperformance of separate accounts over their mutual fund twins, separate account investments perform at the same level as mutual fund investments, gross of fees, and slightly below them, net. Separate account investors choose products that, once adjusted, are more expensive than those chosen by mutual fund investors. Their fixed income picks do better whereas their equity picks do worse.
Keywords: Separate accounts, Mutual funds, Investment vehicles, Investor performance
JEL Classification: G11, G20, G23
Suggested Citation: Suggested Citation