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- Title
Virtual Reality? Investment Consultants' Claims About Their Own Performance.
- Authors
Cookson, Gordon; Jenkinson, Tim; Jones, Howard; Martinez, Jose Vicente
- 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. This paper was accepted by Haoxiang Zhu, finance. Supplemental Material: Data and the internet appendix are available at https://doi.org/10.1287/mnsc.2021.4218.
- Subjects
UNITED Kingdom; VIRTUAL reality; INVESTMENT advisors; CONSULTANTS; MARKETING consultants; ASSET management
- Publication
Management Science, 2022, Vol 68, Issue 11, p8301
- ISSN
0025-1909
- Publication type
Article
- DOI
10.1287/mnsc.2021.4218