Virtual Reality? Investment Consultants’ Claims About Their Own Performance

Gordon Cookson (), Tim Jenkinson, Howard Jones () and Jose Vicente Martinez
Additional contact information
Gordon Cookson: Ofcom, London SE1 9HA, United Kingdom
Howard Jones: Said Business School, University of Oxford, Oxford OX1 1HP, United Kingdom

Management Science, 2022, vol. 68, issue 11, 8301-8318

Abstract: Investment consultants market their services by claiming their fund manager recommendations add significant value. Using nonpublic data sourced from investment consultants and the UK regulator, we find no such evidence, but identify several practices that explain their exaggerated claims: comparisons to benchmarks instead of peers, inclusion of simulated and backfilled returns, use of investment horizons that allow losers to be forgotten, and unexplained exclusions of products from the analysis. Consultants do not fully disclose their methodology to investors, who therefore cannot verify or reliably compare their performance.

Keywords: investment consultants; recommendations; institutional asset managers; voluntary performance disclosures (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.2021.4218 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:68:y:2022:i:11:p:8301-8318

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().