The Genesis of Home Bias? The Location and Portfolio Choices of Investment Company Start-Ups

2008 ◽  
Vol 43 (1) ◽  
pp. 245-266 ◽  
Author(s):  
Jerry T. Parwada
Keyword(s):  
Mutual Funds ◽  
Institutional Investors ◽  
Home Bias ◽  
Investment Management ◽  
Investment Company ◽  
Local Bias ◽  
Fund Managers ◽  
Portfolio Choices ◽  
Money Managers ◽  
Start Ups

AbstractFund managers' bias toward geographically proximate securities is a well-researched phenomenon, yet the origins of managers' location choices have received little empirical scrutiny. This paper traces the employment and geographic heritage of 358 entrepreneurial fund managers and analyzes the determinants of where they locate their firms and stock selections. The evidence suggests that start-ups tend to be based close to the origins of their founders and in regions with more investment management firms, banking establishments, and large institutional money managers. New money managers show a strong local bias in their equity holdings, three times the levels previously documented for mutual funds. The propensity to invest closer to home correlates strongly with the presence of sub-advisory opportunities from institutional investors in the vicinity. While home bias levels between managers who relocate with their start-ups and the rest of the entrepreneurs are similar, preferences for stocks that were formally local persist.

Behavior of fund managers in Malaysian investment management industry

2017 ◽  
Vol 9 (3) ◽  
pp. 205-239 ◽  
Author(s):  
Zamri Ahmad ◽  
Haslindar Ibrahim ◽  
Jasman Tuyon
Keyword(s):  
Bounded Rationality ◽  
Behavioral Finance ◽  
Asset Management ◽  
Institutional Investors ◽  
Institutional Investor ◽  
Current Paper ◽  
Investor Behavior ◽  
Investment Management ◽  
Content Type ◽  
Fund Managers

PurposeThis paper aims to explore the relevance of bounded rationality to the practice of institutional investors in Malaysia. Understanding institutional investor behavior is important, as it can determine the asset prices and consequently the market behavior. Design/methodology/approachA set of questionnaires is used to solicit information regarding the understanding and practical application of behavioral finance theories and strategies among fund managers in the Malaysian investment management practice. In the process, bounded rational theory is aimed to be validated. Fund managers’ possible bounded rational behavior is assessed with reference to their investment management approaches and strategies right from individual beliefs and acquisition of information, as well as investment management and strategies used. FindingsThe findings lend support to the notion that institutional investors too, being normal human beings, are expected to think and behave in a boundedly rational manner as postulated in bounded rational theory. The sources of bounded rationality are individual, institutional and social forces. Thus, portfolio trading and investment management strategies are exposed to wide varieties of behavioral risks. Despite the notions that behavioral risks are real and the impact on fund performance could be pervasive, fund managers’ self-awareness regarding control and institutional readiness to govern behavioral risks in investment practices is still low. Research limitations/implicationsEmpirical evidence drawn in the current paper is subjected to small sample size and specific focus on Malaysian context. Despite this limitation, the sample is statistically sufficient and provides a fair representation, as well as quality opinions, of fund manager’s investment management behavior in Malaysia. This research provides valuable implications to practitioners (fund managers) and regulators (investment management and capital market policymakers). In practice, the current study draws some practical ideas, especially for buy-side institutional investors, on the source and impact of behavioral biases on fund management practices and performance. For regulators, this research highlighted the needs and possible ways to regulate these behavioral risks. Originality/valueThe current paper provides new insights on the theory and practice of the institutional investor. In theory, this research provides evidence of bounded rationality of institutional investor behavior, practicing in the asset management industry in the emerging markets of Malaysia. This evidence lends support to the validity of the bounded rationality theory in explaining institutional investor behavior. In practice, thisresearch provides new insights on the relevance of behavioral finance perspectives and strategies in the asset management industry practice and policy.

The Mutual Fund—An Institutional Investor that Acts Like an Individual

2011 ◽  
Vol 33 (1) ◽  
pp. 1-24 ◽  
Author(s):  
Spencer Usrey ◽  
Edward Schnee ◽  
Gary Taylor
Keyword(s):  
Mutual Funds ◽  
Mutual Fund ◽  
Institutional Investors ◽  
Institutional Investor ◽  
Capital Gains ◽  
Mutual Fund Managers ◽  
Present Evidence ◽  
Investment Policies ◽  
Fund Managers ◽  
Tax Relief

ABSTRACT: We examine changes in the average mutual fund’s investments following the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRR). The JGTRR decreased the tax penalty on dividend and capital gains income. We hypothesize that mutual fund managers will respond to the investment preferences of the underlying shareholders and increase their ownership of dividend-paying firms. We present evidence supporting the hypothesis that mutual fund managers increased their ownership of dividend-paying firms following the JGTRR. However, we do not find evidence that the investment managers of other institutional investors increased their ownership of dividend-paying firms following the JGTRR. These results indicate that mutual funds are influenced by the tax preferences of their underlying investors, form tax clienteles, and exhibit different investment policies when compared to other types of institutional investors.

A Critical Analysis of Selected Public and Private Mutual Fund Schemes in India

2019 ◽  
Vol 118 (8) ◽  
pp. 28-34
Author(s):  
Dr. V. Murali Krishna ◽  
Dr T. Hima Bindu ◽  
Dr. Ravikumar Gunakala
Keyword(s):  
Mutual Funds ◽  
Capital Market ◽  
Mutual Fund ◽  
Portfolio Diversification ◽  
Financial Intermediaries ◽  
Public And Private ◽  
Fund Managers ◽  
Fixed Base ◽  
Banking Institutions ◽  
Different Levels

Mutual Fund Industry is one of the emerged dominant financial intermediaries in Indian Capital Market. The main objective of investing in a mutual fund is to diversify risk. Though the mutual fund invests in diversified portfolio, the fund managers take different levels of risk in order to achieve the schemes objectives. Mutual funds allow portfolio diversification and relative risk management through collection of funds from the savers/investors, the same investing in equity and debt stocks. This type of invested funds is managed by professional experts called as fund managers Funds are categorized as income should fixed base in India are a kind of mutual fund which makes investment in debt securities that have been issued to the corporate, banking institutions and to government in general

scholarly journals Review of Mutual Funds Investment in India

2021 ◽  
Vol 12 (2) ◽  
pp. 1326-1330
Author(s):  
Govindappa Mani, Et. al.
Keyword(s):  
Mutual Funds ◽  
Institutional Investors ◽  
Unit Trust

The Indian mutual fund's industry, which started its excursion with the foundation of the Unit Trust of India in 1964, has seen unobtrusive development lately. There has been developing both regarding AUM just as the assortment of items advertised. As on December 2015, the investors in India have a choice to look over in excess of 1,000 of mutual funds plans spread across 44 fund houses with a complete AUM estimation of '13.46 lakh crores. The passage of unfamiliar players has prompted the presentation of an assortment of inventive items to suit the developing necessities of Indian investors. The Indian mutual fund's industry was discovered to be overwhelmed by institutional investors.

scholarly journals MANAGERIAL ABILITIES AND FACTOR INVESTMENT STYLE PERFORMANCES OF MALAYSIAN MUTUAL FUND MANAGERS

2021 ◽  
Vol 6 (1) ◽  
pp. 118-135
Author(s):  
Pick-Soon Ling ◽  
Ruzita Abdul-Rahim
Keyword(s):  
Mutual Funds ◽  
Portfolio Management ◽  
Mutual Fund ◽  
Market Timing ◽  
Stock Selection ◽  
Investment Style ◽  
Fund Managers ◽  
Equity Mutual Funds ◽  
Timing Ability ◽  
Stock Picking

Background and Purpose: Studies focusing on mutual fund managerial abilities and investment style strategies are still scarce in the literature. Thus, this study aims to provide new evidence and insights into the managerial abilities and investment style performances of Malaysian fund managers.   Methodology: A total of 444 Malaysian equity mutual funds (EMFs) were evaluated using Carhart’s model incorporated with Treynor-Mazuy (T-M) and Henriksson-Merton (H-M) market timing models for the study period, from January 1995 to December 2017.   Findings: Fund managers displayed superior stock selection skills with 32 percent and 43 percent of funds for T-M and H-M respectively, with perverse market timing ability which accounted for 39 percent and 42 percent of funds for T-M and H-M respectively. Perverse timing ability had reduced the superior stock-picking skills of fund managers. This suggests that the EMFs performance could further improve if respective fund managers perform better in market timing ability. The finding also indicates that size effect (SMB) and value effect (HML) play significant roles in investment style strategies, while results of momentum factor (WML) propose that Malaysian fund managers have followed the contrarian strategy.   Contributions: This study contributes in several ways especially in the literature of portfolio management as the evidence is obtained from the largest mutual funds sample size and the longest study period. Moreover, this study also used the highest frequency data to study the effects of market timing which were overlooked in previous studies.   Keywords: Adjusted carhart, Malaysian market, market timing, mutual fund, stock selection.   Cite as: Ling, P-S., & Abdul-Rahim, R. (2021). Managerial abilities and factor investment style performances of Malaysian mutual funds.  Journal of Nusantara Studies, 6(1), 118-135. http://dx.doi.org/10.24200/jonus.vol6iss1pp118-135

scholarly journals The Rise of Institutional Investors

2019 ◽  
Author(s):  
Jan Fichtner
Keyword(s):  
Mutual Funds ◽  
Hedge Funds ◽  
Institutional Investors ◽  
Private Equity ◽  
Short Term ◽  
Equity Funds ◽  
Private Equity Funds ◽  
Important Position ◽  
State Street ◽  
Asset Managers

During the last decades, institutional investors gained an ever more important position as managers of assets and owners of corporations. By demanding (short-term) shareholder value, some of them have driven the financialization of corporations and of the financial sector itself. This chapter first characterizes the specific roles that private equity funds, hedge funds, and mutual funds have played in this development. It then moves on to focus on one group of institutional investors that is rapidly becoming a pivotal factor for corporate control in many countries – the “Big Three” large passive asset managers BlackRock, Vanguard and State Street.

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