Management Accounting Research Journal

Posted on December 26, 2011 by Admin
Management Accounting Research Journal

Management Accounting Research Journal

Separately Managed Accounts and Mutual Funds share a common denominator. They both provide investors access to professional portfolio management.

While there are advantages of investing through Separately Managed Accounts over Mutual Funds, the March 12, 2009 issue of the Wall Street Journal highlighted one important advantage that seems to matter a lot to investors. In 2008 Separately Managed Accounts outperformed Mutual Funds in 25 of 36 stock- and bond-market categories. Over the past three years Separately Managed Accounts outperformed Mutual Funds in 22 of 27 categories.

The advantage of Separately Managed Accounts over Mutual Funds is not only superior returns, but the structure of Separately Managed Accounts may provide individual investors unique benefits. Here are some key advantages when comparing Separately Managed Accounts over Mutual Funds.

Transparency of Separately Managed Accounts Over Mutual Funds

An important advantage of Separately Managed Accounts over Mutual Funds is the ownership of the underlying asset. The investor owns specific shares which are clearly outlined on their statement, such as 23 shares of ABCDE, 18 shares of FG, 34 shares of HIJ, etc.

In a Mutual Fund you own shares of a pool of securities with other investors. When an investor holds Mutual Funds, these assets are identified by the name of the mutual fund company, such as Fidelity, PIMCO, or Vanguard, as well as the focus or discipline, such as Emerging Markets, Total Return, or U.S. Growth. In a Mutual Fund, you’re never really quite certain of the underlying investments.

Another advantage of Separately Managed Accounts is the transparency of fees. You can easily calculate what fee will be charged as it is a fixed percentage based on assets under management.