Also, investment performance benchmarks tend to be chosen from a limited number of market indexes, and this could give rise to a herd mentality among investors. Some managers believe a collective underperformance that includes themselves alongside their peers is preferable to being 'singled out' after a contrarian position fails to perform in the short term, according to the CGFS.
The CGFS’s working group on incentive structures in institutional asset management conducted the research. The committee decided to set up the working group back in September 2001. Bank of France’s Michel Cardona is currently chairman of the group.