Who Should Choose the Money Managers? Institutional Sponsors’ Equity Manager Performance

53 Pages Posted: 5 Jun 2017 Last revised: 17 Nov 2020

See all articles by Hyoung Goo Kang

Hyoung Goo Kang

Hanyang University

Min Yeon Han

Hanyang University

Sang-Gyung Jun

Hanyang University

Ji Yeol Jimmy Oh

Sungkyunkwan University

Date Written: February 22, 2018

Abstract

Institutional sponsors increasingly seek outside help in investment management by delegating manager selection and capital allocation decisions to external lead managers. Whether this enhances performance, however, is yet to be examined. We fill the gap using a unique dataset of Korean institutional sponsors that enables a detailed comparison of domestic equity funds selected by the sponsors against those by lead managers. We find that lead managers allocate their capital more efficiently and are able to identify managers with greater skill. Their positive implications on performance appears to emanate from the lead managers’ ability to detach themselves from the sponsors’ internal organizational issues.

Keywords: Delegated portfolio management, institutional investors, intermediated investment management, outsourced CIO, investment pool

JEL Classification: G11, G20, G23

Suggested Citation

Kang, Hyoung Goo and Han, Min Yeon and Jun, Sang-Gyung and Oh, Ji Yeol Jimmy, Who Should Choose the Money Managers? Institutional Sponsors’ Equity Manager Performance (February 22, 2018). Available at SSRN: https://ssrn.com/abstract=2980734 or http://dx.doi.org/10.2139/ssrn.2980734

Hyoung Goo Kang

Hanyang University ( email )

222 Wangsimniro
Seongdong-gu
Seoul, 133-791
Korea, Republic of (South Korea)

Min Yeon Han

Hanyang University ( email )

Korea, Republic of (South Korea)

Sang-Gyung Jun

Hanyang University ( email )

Seoul
Korea, Republic of (South Korea)

Ji Yeol Jimmy Oh (Contact Author)

Sungkyunkwan University ( email )

25-2 Sungkyunkwan-ro
Jongno-ju
Seoul, 03063

HOME PAGE: http://sites.google.com/view/jyjoh

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