It is becoming common for institutional sponsors to receive outside help in manager selection by delegating the decisionmaking to external lead managers. Yet, performance implications of this recent trend have not hitherto been examined. We fill the gap with a unique dataset compiled by Korean institutional sponsors, which enables a detailed comparison of domestic equity managers selected by the sponsors against those by lead managers. We find managers chosen by lead managers to significantly outperform in most measures. Further evidence suggests this outperformance emanates primarily from the lead managers's ability to detach themselves from internal issues within the sponsor organization.

JEL Classification: G11, G20, G23.

Keywords: Delegated portfolio management, institutional investors, intermediated investment management, outsourced CIO, investment pool.