Institutional Investor Expectations, Manager Performance, and Fund Flows
46 Pages Posted: 17 Apr 2013 Last revised: 20 Feb 2017
Date Written: May 23, 2015
Using survey data we analyze institutional investors’ expectations about the future performance of fund managers and the impact of those expectations on asset allocation decisions. We find that institutional investors allocate funds mainly on the basis of fund managers’ past performance and of investment consultants’ recommendations, but not because they extrapolate their expectations from these. This suggests that institutional investors base their investment decisions on the most defensible variables at their disposal, and supports the existence of agency considerations in their decision making.
Keywords: Institutional asset management, asset flows, fund performance, service quality, investment consultants
JEL Classification: G20, G23, G30
Suggested Citation: Suggested Citation