Revealed Heuristics: Evidence from Investment Consultants’ Search Behavior

Author:

Chava Sudheer1,Kim Soohun2,Weagley Daniel1

Affiliation:

1. Scheller College of Business, Georgia Tech, USA

2. College of Business, KAIST, South Korea

Abstract

Abstract Using proprietary data from a major fund data provider, we analyze the screening activity of investment consultants (ICs). We find that ICs frequently shortlist funds using threshold screens clustered at $500MM for AUM, 0% for benchmark-adjusted return, and quartiles for return percentile rank screens. Funds just above the $500MM AUM threshold get 14%–18% more page views and 5–9 pp greater flows over the next year compared to similar funds just below the threshold. Our results are consistent with ICs using a two-stage consider-then-choose decision-making process and cognitive reference numbers in selecting screening thresholds. (JEL G41, G11, G14, G29) Received January 8, 2021; editorial decision September 3, 2021 by Editor Jeffrey Pontiff. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Publisher

Oxford University Press (OUP)

Subject

Economics and Econometrics,Finance

Cited by 2 articles. 订阅此论文施引文献 订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献

1. Investment Consultants in Private Equity;The Palgrave Encyclopedia of Private Equity;2024

2. Finding Fortune: How Do Institutional Investors Pick Asset Managers?;The Review of Financial Studies;2022-12-14

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