Facing Up to Fund Managers: An exploratory field study of how institutional investors make decisions

Abstract

Purpose – The paper aims to describe the behind-the-scenes strategy and processes that fund managers use to make investment decisions. Design/methodology/approach – The research involved semi-structured, face-to-face interviews with 34 fund managers in Istanbul, London, Melbourne and New York during 2012. Results describe their approach, and tie it back to theoretical explanations. Findings – Large investors make limited use of neoclassical finance theory. They believe that securities markets trend over the short term, mean revert over the long term, and have upward sloping demand curves. They rely on qualitative techniques, think of security prices rather than returns, acknowledge constra..