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Overconfidence and active management: An empirical study across Swiss pension plans


Gort, Christoph (2009). Overconfidence and active management: An empirical study across Swiss pension plans. Journal of Behavioral Finance, 10(2):69-80.

Abstract

Pension plans in Switzerland favor active management over indexing to implement their strategic asset allocation. Empirical surveys show, however, that their success has been below expectations, as the median performance of Swiss pension plans in domestic and international equities is below market indices even gross of fees. The results of this paper's survey across decisionmakers of Swiss pension plans sheds some light on why active management is still so popular across Swiss pension plans. On average the participants in the sample are prone to the better-than-average-effect. A majority expects their managers and their overall pension plan to outperform the other survey participants in the future. The subjective perceptions of the own skill level relative to the competitors can explain the popularity of active management across Swiss pension plans.

Pension plans in Switzerland favor active management over indexing to implement their strategic asset allocation. Empirical surveys show, however, that their success has been below expectations, as the median performance of Swiss pension plans in domestic and international equities is below market indices even gross of fees. The results of this paper's survey across decisionmakers of Swiss pension plans sheds some light on why active management is still so popular across Swiss pension plans. On average the participants in the sample are prone to the better-than-average-effect. A majority expects their managers and their overall pension plan to outperform the other survey participants in the future. The subjective perceptions of the own skill level relative to the competitors can explain the popularity of active management across Swiss pension plans.

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Additional indexing

Item Type:Journal Article, not refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Uncontrolled Keywords:Better-than-average-effect; Active management; Forecasting; Pension plans; Manager selection
Language:English
Date:April 2009
Deposited On:19 Jan 2010 23:44
Last Modified:05 Apr 2016 13:46
Publisher:Taylor & Francis
ISSN:1542-7560
Additional Information:This is an electronic version of an article published in Journal of Behavioral Finance, 10(2):69-80. Journal of Behavioral Finance is available online at: http://www.informaworld.com/smpp/title~db=all~content=t775648092
Publisher DOI:https://doi.org/10.1080/15427560902905369
Permanent URL: https://doi.org/10.5167/uzh-27821

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