Other people's money: A comparison of institutional investors*

Using unique equity ownership data, we investigate the stock picking preferences and return forecasting performances of institutional investors that manage their own money against those that manage others'. We reveal that these investors' preferences significantly differ in historical patterns, liquidity and prudence when picking stocks. In particular, 'own money managers' display a risk-seeking behaviour whereas "others' money managers" exhibit risk-averse charac-teristics. However, our results indicate that both types of investors are well informed, albeit own money managers excel in the short-term while others' money managers are successful in the long-term.