Pension Plan Investment Management Mandates: An Empirical Analysis of Manager Selection
34 Pages Posted: 21 Sep 2004
Date Written: September 20, 2004
We examine the impact of several factors on the selection of portfolio managers for Australian pension plan mandates. Performance measures do not affect the probability of a mandate allocation. Pension sponsors tend to choose managers with top-quartile five-year performance who have recently beaten a market benchmark. Management expenses have a negative impact on a manager's chances. A surprising result is sponsors' tolerance for high portfolio trading costs. Mandates are spread across manager investment styles. The style and institutional attributes of preferred managers suggest trustees' reputation and prudential concerns matter, particularly for the aggregate annual mandate allocations.
Keywords: Pension plan mandates, fund managers, delegated portfolio management.
Suggested Citation: Suggested Citation