Picking Winners? Investment Consultants' Recommendations of Fund Managers
University of Oxford - Said Business School; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)
University of Oxford, Saïd Business School
Jose Vicente Martinez
University of Oxford - Said Business School
September 17, 2013
U.S. plan sponsors managing over $13 trillion rely on investment consultants for advice about which funds to invest in. Using survey data, we analyze what drives consultants’ recommendations of institutional funds, what impact these recommendations have on flows, and how much value they add to plan sponsors. We examine the aggregate recommendations of consultants with a share of over 90% of the U.S. consulting market. We find that consultants’ recommendations of funds are driven largely by soft factors, rather than the funds’ past performance, and that their recommendations have a very significant effect on fund flows, but we find no evidence that these recommendations add value to plan sponsors.
Number of Pages in PDF File: 47
Keywords: asset management, investment consultants, fund performance, asset flows
JEL Classification: G20, G23, G30working papers series
Date posted: September 18, 2013
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