Do investor types matter? A comparative analysis of separate account characteristics and performance

Abstract This study investigates the characteristics and performance of separately managed accounts (SAs), focusing on differences between retail and institutional investor types. It finds that institutional SAs outperform retail and mixed SAs in terms of risk‐adjusted returns, primarily driven by distinctively lower fees and a smaller number of managed accounts. However, once characteristics are controlled for, performance differences become insignificant, suggesting no difference in manager skill. Moreover, the analysis shows that characteristics affect the performance of institutional, retail, and mixed SAs differently. These findings highlight the nuanced impact of investor type on SA performance, offering new insights into asset management practices.