Performance of Institutional Trading Desks: An Analysis of Persistence in Trading Costs

Using a proprietary dataset of institutional investors' equity transactions, we document that institutional trading desks can sustain relative performance over adjacent periods.We find that trading-desk skill is positively correlated with the performance of the institution's traded portfol...

Full description

Saved in:
Bibliographic Details
Published in:The Review of financial studies 2012-02, Vol.25 (2), p.557-598
Main Authors: Anand, Amber, Irvine, Paul, Puckett, Andy, Venkataraman, Kumar
Format: Article
Language:English
Subjects:
Budget deficits
Business orders
Correlation analysis
Cost analysis
Cost estimates
Desks
Institutional investments
Investment
Investors
Mutual funds
Portfolio performance
Securities trading
Stock brokers
Stock exchange
Stock prices
Stockbrokers
Studies
Trade
Trading
Transaction costs
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Using a proprietary dataset of institutional investors' equity transactions, we document that institutional trading desks can sustain relative performance over adjacent periods.We find that trading-desk skill is positively correlated with the performance of the institution's traded portfolio, suggesting that institutions that invest resources in developing execution abilities also invest in generating superior investment ideas. Although some brokers can deliver better executions consistently over time, our analysis suggests that trading-desk skill is not limited to a selection of better brokers. We conclude that the trade implementation process is economically important and can contribute to relative portfolio performance.
ISSN:0893-9454
1465-7368
DOI:10.1093/rfs/hhr110