Week 6 - Institutional investors

Question 1

What are the parts of Investment management process?

Answer 1

Setting investment objectives.
Establishing investment policy.
Selecting a portfolio strategy.
Measuring and evaluating performance.

Question 2

How institutional investors generate investment ideas?

Answer 2

Fundamental analysis.
Technical analysis.
Herding and conformity (minimizing responsibility).
Mass media.
Social interactions (word-of-mouth).

Question 3

What are the conclusions of this lecture?

Answer 3

Some institutional investors make systematic investment mistakes.
Institutional investors are also subject to behavioral biases:
Overconfidence.
Limited attention,
Representativeness, preference for conformity,…
How institutional investors generate investment ideas?
Past performance.
Mass media.
Social interactions (word-of-mouth).