Analyzing Separately Managed Accounts

Majority of serious studies on investment managers have focused on mutual funds. This focus on mutual funds is at odds with how investors choose to use the various forms of delegated money management. For example, the aggregate amount of dollars invested in mutual funds is similar to that invested i...

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Bibliographic Details
Published in:Journal of Financial Planning 2011-11, Vol.24 (11), p.30
Main Author: Riepe, Mark W
Format: Article
Language:English
Subjects:
Investment advisors
Investment policy
Mutual funds
Rates of return
Studies
Online Access:Get full text
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Summary:Majority of serious studies on investment managers have focused on mutual funds. This focus on mutual funds is at odds with how investors choose to use the various forms of delegated money management. For example, the aggregate amount of dollars invested in mutual funds is similar to that invested in separately managed accounts (SMA). With the advent of high-quality data sets that document the returns and characteristics of separately managed accounts, the disparity between mutual fund studies and SMAs is being addressed. The author's colleagues Jim Peterson, Michael Iachini, and Wynce Lam (hereafter referred to as "PIL") provide an excellent example of the new work in this area. PIL studied 3,081 domestic equity strategies from 1991-2009. PIL concluded that when evaluating SMAs, past performance does matter assuming the performance is properly adjusted for various sources of risk. However, there is more to the story. Those managers willing to be more active had better returns, as did managers who didn't get too large in terms of assets invested in their strategy.
ISSN:1040-3981