Separate Account vs Mutual Fund Investors: Manager Selection and Performance

46 Pages Posted: 12 Jul 2021 Last revised: 26 Apr 2022

See all articles by Howard Jones

Howard Jones

University of Oxford, Saïd Business School

Jose Vicente Martinez

University of Connecticut

Alexander Montag

Saïd Business School, University of Oxford; Research Institute of Industrial Economics (IFN)

Date Written: April 2022

Abstract

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 investors perform at the same level as mutual fund investors, 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

Jones, Howard and Martinez, Jose Vicente and Montag, Alexander, Separate Account vs Mutual Fund Investors: Manager Selection and Performance (April 2022). Available at SSRN: https://ssrn.com/abstract=3883499 or http://dx.doi.org/10.2139/ssrn.3883499

Howard Jones (Contact Author)

University of Oxford, Saïd Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

HOME PAGE: http://www.sbs.ox.ac.uk/about-us/people/howard-jones

Jose Vicente Martinez

University of Connecticut ( email )

2100 Hillside Road, Unit 1041
Storrs, CT 06269
United States

HOME PAGE: http://https://www.business.uconn.edu/person/jose-martinez/

Alexander Montag

Saïd Business School, University of Oxford ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

HOME PAGE: http://www.sbs.ox.ac.uk/about-us/people/alexander-montag

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

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