Do institutional investors have sensible investment beliefs?

This article investigates the building blocks to successful investment strategies for institutional investors. It presents the results of a worldwide survey of investment beliefs, and finds striking differences in how pension funds and commercial asset managers view capital markets. Asset managers seem to use their investment beliefs to demonstrate their competitive advantage to current and potential clients. Pension funds, on the other hand, seem to use formulated investment beliefs as a tool for decision-making. We link investment beliefs to performance measures and find that pension funds with clear beliefs about asset pricing and risk diversification have better return/risk performance measures, as well as lower costs.

Koedijk, Kees C. G. and Slager, Alfred, Do Institutional Investors Have Sensible Investment Beliefs? (May 20, 2009). Rotman International Journal of Pension Management, Vol. 2, No. 1, 2009.

About Kees Koedijk

Kees Koedijk is Professor of Financial Management and Dean of the Tilburg School of Economics and Management at Tilburg University. Kees Koedijk was the chairman of the Raad van Economisch Adviseurs (REA), an important council of economic advisors to the Dutch Parliament. In the past, Koedijk has won several awards for his research on sustainable development. He has published extensively on finance, responsible investment, and pension management. During the last 10 years he served at several investment committees of pension funds.
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