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Who should choose the money managers? Institutional sponsors' equity manager performance

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  • Han, Min-Yeon
  • Jun, Sang-Gyung
  • Oh, Ji Yeol Jimmy
  • Kang, Hyoung-Goo

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.

Suggested Citation

  • Han, Min-Yeon & Jun, Sang-Gyung & Oh, Ji Yeol Jimmy & Kang, Hyoung-Goo, 2023. "Who should choose the money managers? Institutional sponsors' equity manager performance," Pacific-Basin Finance Journal, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:pacfin:v:78:y:2023:i:c:s0927538x23000409
    DOI: 10.1016/j.pacfin.2023.101974
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    More about this item

    Keywords

    Delegated portfolio management; Institutional investors; Intermediated investment management; Outsourced CIO; Investment pool;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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