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SUMMARY:Money Management and Real Investment - Simon Gervais (Duke)
DTSTART:20240516T113000Z
DTEND:20240516T123000Z
UID:TALK205765@talks.cam.ac.uk
CONTACT:Cerf Admin
DESCRIPTION:We propose and analyze an equilibrium model of money managemen
 t in which the asset allocation\ndecisions of money managers affect the pr
 oduction decisions of firms. The model produces two\nmain results. First\,
  comparing the performance of money managers to that of the overall market
 \nportfolio becomes less appropriate as investors (endogenously) choose to
  delegate more of their\nmoney to them. Indeed\, as money managers control
  more money\, their holdings get closer to the\nmarket portfolio\, making 
 it less likely that they outperform it. Second\, although money managers\n
 may be outperformed by the market portfolio after their fees are taken int
 o account\, it is optimal for\ninvestors to hire their services. This is b
 ecause money managers prompt a more efficient allocation\nof capital\, mak
 ing the economy more productive and firms more valuable in the process. In
  fact\, as\nwe show\, the presence of money managers can improve the welfa
 re of all investors\, whether or not\nthese investors choose to delegate t
 heir investment decisions to money managers.
LOCATION:109 - Castle Teaching Room
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