Date of Award

Spring 4-18-2017

Degree Type


Degree Name

Executive Doctorate in Business (EDB)



First Advisor

Dr. Conrad Ciccotello

Second Advisor

Dr. Vikas Agarwal

Third Advisor

Dr. Kevin Mullally


I describe in detail the structure of separately managed accounts (SMAs) and how those accounts compare to and differ from mutual funds and hedge funds. I then examine how employee ownership of advisory firms — that is, firms in which employees have partnership or stock interests — affects the performance, idiosyncratic risk, and R-square of each firm’s SMA portfolios. In testing 14,484 different portfolios from more than 1,100 different advisory firms from 1995 to 2015, I find that SMAs at firms with employee ownership outperform SMAs at firms without it. The greatest impact is in the 25–50% employee-ownership range. Positive returns, risk, and all decrease as employee ownership increases beyond 50%, but SMA performance levels remain above those of firms in which the portfolio manager has no employee ownership. I also find that the Sharpe ratio is negatively related to employee ownership, reflecting a deterioration of risk-adjusted returns at higher employee-ownership levels. These results suggest both that the presence of advisor employee ownership is a significant, positive indicator for SMA performance and that those advisory firms assume more idiosyncratic risk to achieve these higher returns. For investors, my results show that employee ownership of advisory firms can be used as a differentiating factor to aid them in making SMA choices between portfolios with otherwise similar characteristics.