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Institutional asset managers: industry trends, incentives and implications for market efficiency

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  • Ingo Fender

Abstract

In recent years, investors have increasingly delegated the management of their investment portfolios to institutional asset managers. The scale of such delegated investing and its development over time are apparent from the growth in the size of assets under management by different types of institutional investors across various countries (Graph 1). Moreover, demographic trends can be expected to sustain the industry’s growth well into the future. The distinguishing characteristic of the industry is that asset management activities involve a series of delegated processes, linking the “triangle” formed by invested funds, fund owners and fund managers. As a result, contractual structures that seek to align the incentives of fund owners with the incentives of those charged with the management of these funds are an integral part of the business – and are bound to change as the industry continues to evolve.

Suggested Citation

  • Ingo Fender, 2003. "Institutional asset managers: industry trends, incentives and implications for market efficiency," BIS Quarterly Review, Bank for International Settlements, September.
    • Handle: RePEc:bis:bisqtr:0309h
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    References listed on IDEAS

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    1. Michael C. Jensen, 1968. "The Performance Of Mutual Funds In The Period 1945–1964," Journal of Finance, American Finance Association, vol. 23(2), pages 389-416, May.
    2. Shleifer, Andrei & Vishny, Robert W, 1997. "The Limits of Arbitrage," Journal of Finance, American Finance Association, vol. 52(1), pages 35-55, March.
    3. Carhart, Mark M, 1997. "On Persistence in Mutual Fund Performance," Journal of Finance, American Finance Association, vol. 52(1), pages 57-82, March.
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    Cited by:

    1. Vladyslav Sushko & Grant Turner, 2018. "The implications of passive investing for securities markets," BIS Quarterly Review, Bank for International Settlements, March.
    2. Joseph Gerakos & Juhani T. Linnainmaa & Adair Morse, 2021. "Asset Managers: Institutional Performance and Factor Exposures," Journal of Finance, American Finance Association, vol. 76(4), pages 2035-2075, August.
    3. Claudio E. V. Borio, 2004. "Market distress and vanishing liquidity: anatomy and policy options," BIS Working Papers 158, Bank for International Settlements.

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