Working Paper

Asset Manager Commonality and Portfolio Similarity

Abstract: Asset managers are increasingly influential in financial markets. We use new regulatory as well as manually collected data on asset managers of life insurers, the largest institutional investors of corporate bonds, and find that insurers with the same asset managers have more similar portfolios and trades. This similarity increases further if the asset manager actively oversees the majority of both insurers’ assets. Moreover, the effect intensifies the longer insurers share the same asset manager. Nevertheless, the effect is primarily driven by purchases rather than sales and the resulting increase in correlation of portfolio returns is relatively small, alleviating associated financial stability concerns.

JEL Classification: G11; G18; G2;

https://doi.org/10.24149/wp2515

Bibliographic Information

Provider: Federal Reserve Bank of Dallas

Part of Series: Working Papers

Publication Date: 2025-04-25

Number: 2515