Delegated Portfolio Management, Benchmarking, and the Effects on Financial Markets /

We analyze the implications of linking the compensation of fund managers to the return of their portfolio relative to that of a benchmark-a common solution to the agency problem in delegated portfolio management. In the presence of such relativeperformance- based objectives, investors have reduced e...

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Hlavní autor: Igan, Deniz
Další autoři: Pinheiro, Marcelo
Médium: Časopis
Jazyk:English
Vydáno: Washington, D.C. : International Monetary Fund, 2015.
Edice:IMF Working Papers; Working Paper ; No. 2015/198
On-line přístup:Full text available on IMF
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245 1 0 |a Delegated Portfolio Management, Benchmarking, and the Effects on Financial Markets /  |c Deniz Igan, Marcelo Pinheiro. 
264 1 |a Washington, D.C. :  |b International Monetary Fund,  |c 2015. 
300 |a 1 online resource (39 pages) 
490 1 |a IMF Working Papers 
500 |a <strong>Off-Campus Access:</strong> No User ID or Password Required 
500 |a <strong>On-Campus Access:</strong> No User ID or Password Required 
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520 3 |a We analyze the implications of linking the compensation of fund managers to the return of their portfolio relative to that of a benchmark-a common solution to the agency problem in delegated portfolio management. In the presence of such relativeperformance- based objectives, investors have reduced expected utility but markets are typically more informative and deeper. Furthermore, in a multiple asset/market framework we show that (i) relative performance concerns lead to an increase in the correlation between markets (financial contagion); (ii) benchmark inclusion increases price volatility; (iii) home bias emerges as a rational outcome. When information is costly, information acquisition is hindered and this attenuates the effects on informativeness and depth of the market. 
538 |a Mode of access: Internet 
700 1 |a Pinheiro, Marcelo. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2015/198 
856 4 0 |z Full text available on IMF  |u http://elibrary.imf.org/view/journals/001/2015/198/001.2015.issue-198-en.xml  |z IMF e-Library