We study static correlation and delocalisation errors and show that even methods with good energies can yield significant delocalization errors that affect the density, leading to large errors in predicting e.g. dipole moments. We illustrate this point by comparing existing state-of-art approaches with an accurate exchange correlation functional based on a generalised valence-bond ansatz, in which orbitals and fractional occupations are treated as variational parameters via an optimized effective potential (OEP). We show that the OEP exhibits step and peak features which, similar to the exact Kohn-Sham (KS) potential of DFT, are crucial to prevent charge delocalization. We further show that the step is missing in common approximations within reduced density matrix functional theory resulting in delocalization errors comparable to those found in DFT approximations. Finally, we explain the delocalization error as coming from an artificial mixing of the ground state with a charge-transfer excited state which is avoided if occupation numbers exhibit discontinuities.
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