This study commemorates the 25th anniversary of The European Journal of Finance (EJF) by providing a detailed retrospective analysis of the journal’s output using a range of bibliometric tools. The...

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Twenty-five years of The European Journal of Finance (EJF): a retrospective analysis

OVERVIEW Over the last decades, the intermediation of financial assets has gradually shifted from banks towards institutional investors, such as pension funds, insurance companies, and mutual funds. In this process of re-intermediation, the assets of institutional investors of the EU-15 countries tripled from 49 per cent of GDP in 1990 to 165 per cent in 2012. This chapter starts off with an overview of the growth of institutional investors over the last two decades. The development of the main types of institutional investors is documented. There is a small group of countries with large-scale funded pensions (Denmark, Ireland, the Netherlands, and the United Kingdom). Other countries rely more on life insurance and mutual funds. New types of institutional investment, such as hedge funds and private equity, are also discussed. Both the demand side (growing investments by pension funds to cater for ageing, and by mutual funds to accommodate wealth accumulation of households) and the supply side (shift from bank- financing to market- financing) point to further growth of institutional investment. There is no substantial institutional investment yet in the new EU Member States, but institutional investors in these countries are expected to grow in line with economic development. This chapter also analyses the impact of institutional investors on the functioning of the financial system. Institutional investors are pooling funds and transferring economic resources over different asset classes and countries. They also transfer resources over time. Moreover, they increase the efficiency of the financial system. One would expect institutional investors to invest according to the principles of finance theory as implied by the international version of the Capital Asset Pricing Model (CAPM). This theory shows the gains of international diversification. However, there is a home bias in investments of institutional investors. Still, this bias declined from 1997 to 2012, especially in the countries in the euro area, a trend which can be attributed to the introduction of the euro.

European Financial Markets and Institutions: The Role of Institutional Investors

This paper introduces a return-based approach to studying a possible home bias of European equity funds by estimating their exposures to their domestic markets. We first confirm the robustness of o...

A return-based approach to identify home bias of European equity funds

This article analyzes patterns of convergence in series of return of investment funds in shares in Brazil, from the use of the methodology of Phillips and Sul (2007). Unlike the theory of portfolios and in disagreement with the characteristics of this market - regulation, transparency, efficiency and informational transaction costs -, it shows a heterogeneous behavior, from the formation of four clubs with specific transition and composition dynamics. The private nature of the management legal entity, the incentives associated with the recovery of low administrative fees, in addition to rates of performance and the emphasis on gains offset by risks, differentiate funds that are losers or winners.

/pdf/mutual-investments-funds-in-shares-in-brazil-incentives-1atjtfc7sp.pdf

Mutual Investments Funds in Shares in Brazil: Incentives, Management and Convergence

Pension schemes are major institutional investors, and investment performance has important consequences for pension schemes. In 2014 the assets under management of the largest 300 pension schemes in the world were $15.4 trillion, or an average of $51.3 billion for each scheme (Towers Watson 2015). There are also many tens of thousands of smaller pension schemes, and in 2014 they had assets of roughly $20.7 trillion (Towers Watson 2015). In 2012 pension schemes in the OECD countries had assets worth $32.1 trillion, representing 41 % of the assets held by institutional investors (OECD 2013b). Table 3.1 lists the 45 largest occupational pension schemes in 2014, and shows that 27 of these schemes are American and five are Dutch. Over half of these 45 schemes are for public sector workers, and only a quarter are large corporate schemes.

Investment by Pension Funds

Using a panel data set of more than 600 Dutch pension funds (PFs) between 1992 and 2006, we investigate asset allocation behavior of Dutch PFs across multiple asset classes. We find that domestic investments, also known as home bias, in portfolio choices of Dutch institutional investors have fallen. We also find that the introduction of the euro, the dot-com crisis (1999–2001) and individual PF's characteristics are significant determinants of home bias. Overall, mature PFs’ portfolios are diversified internationally, whereas large PFs seem to prefer to only scale up their foreign, less-risky positions at the expense of domestic fixed-income positions. The effect of the dot-com crisis is more pronounced for domestic bonds, whereas the introduction of the euro was more important for domestic equities.

Home Bias and Dutch Pension Funds’ Investment behaviour

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Home Bias and Dutch Pension Funds’ Investment behaviour