Investment Beliefs: The Importance of Focus for an Institutional Investor

Working paper prepared for the ICPM / Netspar / Maastricht University Joint Discussion Forum, October 29-31, 2007

30 Pages Posted: 13 Dec 2008

See all articles by Kees C. G. Koedijk

Kees C. G. Koedijk

Tilburg University - Department of Finance

Alfred Slager

Tilburg University - TIAS School for Business and Society

Date Written: October 27, 2007

Abstract

We investigate the building blocks for institutional investors' successful investment strategies. We focus on organizations which formulate investment beliefs and define clear views on how the capital markets work. We present the results of a world wide survey of investment beliefs. We find striking differences in how asset managers and pension funds view capital markets, and what they believe is their added value.

We link investment beliefs to performance measures and find that pension funds with beliefs on risk diversification show better return-risk performance measures, but also lower costs. Also, funds that hold clear views on risk management realize higher alpha and return/risk ratios.

Keywords: Investment strategy, Pension funds, Asset managers

JEL Classification: G23, G11, G12

Suggested Citation

Koedijk, Kees G. and Slager, Alfred, Investment Beliefs: The Importance of Focus for an Institutional Investor (October 27, 2007). Working paper prepared for the ICPM / Netspar / Maastricht University Joint Discussion Forum, October 29-31, 2007. Available at SSRN: https://ssrn.com/abstract=1313859 or http://dx.doi.org/10.2139/ssrn.1313859

Kees G. Koedijk

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 4663048 (Phone)
+31 13 4662052 (Fax)

Alfred Slager (Contact Author)

Tilburg University - TIAS School for Business and Society ( email )

Warandelaan 2
TIAS Building
Tilburg, Noord Brabant 5037 AB
Netherlands

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