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Institutional Investor Expectations, Manager Performance, and Fund Flows

46 Pages Posted: 17 Apr 2013 Last revised: 20 Feb 2017

Howard Jones

University of Oxford, Saïd Business School

Jose Vicente Martinez

University of Connecticut

Date Written: May 23, 2015

Abstract

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

Jones, Howard and Martinez, Jose Vicente, Institutional Investor Expectations, Manager Performance, and Fund Flows (May 23, 2015). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming; Saïd Business School WP 2015-6. Available at SSRN: https://ssrn.com/abstract=2252122 or http://dx.doi.org/10.2139/ssrn.2252122

Howard Jones

University of Oxford, Saïd Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

HOME PAGE: http://www.sbs.ox.ac.uk/research/people/Pages/HowardJones.aspx

Jose Vicente Martinez (Contact Author)

University of Connecticut ( email )

2100 Hillside Road, Unit 1041
Storrs, CT 06269
United States

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