Are specialists ‘special’? We answer this question using data on the stock portfolios of U.S. institutional investors for the period 1990-2014. Our main findings are as follows: first, we show that many investors tend to focus their economically meaningful investments on a relatively small subset of stocks. This translates itself into a strong and significant portfolio overlap. Finally, specialized investors (those with concentrated portfolios) tend to emphasize certain stock-specific characteristics, but we find no evidence that their returns are significantly different from those of diversified investors. Overall, our findings suggest that specialists are not that special.
The Case of Institutional Investors (May 27, 2016).
Economics, Finance, Financial Economics, and Government