PT  - JOURNAL ARTICLE
AU  - Scott D. Stewart
TI  - Performance, Perception, and Manager Selection
AID  - 10.3905/jpm.2022.1.351
DP  - 2022 Mar 10
TA  - The Journal of Portfolio Management
PG  - jpm.2022.1.351
4099  - https://pm-research.com/content/early/2022/03/10/jpm.2022.1.351.short
4100  - https://pm-research.com/content/early/2022/03/10/jpm.2022.1.351.full
AB  - Empirical evidence in the finance literature clearly demonstrates that institutional investors do not add value from selecting managers. Yet plan sponsors are highly confident in their manager selection abilities, as shown by results from three surveys reported in this article. The author proposes that the apparent inconsistency between performance and perception is due to investors using inappropriate benchmarks—specifically, they do not evaluate terminated managers. As evidence, the author presents regression results that show a near-zero statistical relationship between surveyed pension officers’ self-confidence and their belief in the importance of evaluating performance of investment decisions.