Opazo, LuisRaddatz, ClaudioSchmukler, Sergio L.2014-06-252014-06-252014-06https://hdl.handle.net/10986/18756Developing countries are trying to develop long-term financial markets and institutional investors are expected to play a key role. This paper uses unique evidence on the universe of institutional investors from the leading case of Chile to study to what extent mutual funds, pension funds, and insurance companies hold and bid for long-term instruments, and which factors affect their choices. The paper uses monthly asset-level portfolios to show that, despite the expectations, mutual and pension funds invest mostly in short-term assets relative to insurance companies. The significant difference across maturity structures is not driven by the supply side of debt or tactical behavior. Instead, it seems to be explained by manager incentives (related to short-run monitoring and the liability structure) that, combined with risk factors, tilt portfolios toward short-term instruments, even when long-term investing yields higher returns. Thus, the expansion of large institutional investors does not necessarily imply longer-term markets.en-USCC BY 3.0 IGOAGENCY PROBLEMSASSET CLASSASSET CLASSESASSET HOLDINGSASSET MANAGERSASSET PRICESASSET VALUESASSET-LIABILITY MISMATCHASYMMETRIC INFORMATIONAUCTIONAUCTION AMOUNTAUCTIONSBANK DEPOSITSBANK POLICYBANKING SECTORBANKING SYSTEMBIDBIDSBONDBOND AUCTIONSBOND FUNDSBOND INDEXBOND INDICESBOND MARKETSBORROWERCAPITAL MARKETCAPITAL MARKET DEVELOPMENTCAPITAL MARKETSCAPITAL REQUIREMENTCASH FLOWSCENTRAL BANKCONTRACTUAL SAVINGSCONTRACTUAL SAVINGS INSTITUTIONSCORPORATE BONDCORPORATE BOND MARKETCORPORATE BONDSCORPORATE DEBTCORPORATE INVESTMENTDEBTDEBT HOLDINGSDEBT ISSUANCESDEBT MATURITIESDEBT MATURITYDEBTORSDEFAULT RISKDERIVATIVESDERIVATIVES MARKETSDEVELOPING COUNTRIESDISCLOSURE REQUIREMENTSDOLLAR BONDSDOMESTIC INSTITUTIONAL INVESTORSDOMESTIC MARKETEMERGING ECONOMIESEMERGING MARKETEMERGING MARKET DEBTEMERGING MARKETSEQUITIESEQUITY HOLDINGEQUITY INSTRUMENTSEXCHANGE RATESFAIR VALUEFEDERAL RESERVEFEDERAL RESERVE BANKFIDUCIARY RESPONSIBILITYFINANCIAL CRISESFINANCIAL CRISISFINANCIAL DEVELOPMENTFINANCIAL FRAGILITYFINANCIAL MARKETFINANCIAL MARKETSFINANCIAL STABILITYFINANCIAL STUDIESFINANCIAL SUPPORTFINANCIAL SYSTEMFIXED INCOMEFIXED INCOME INVESTMENTFIXED INCOME MARKETFOREIGN DIRECT INVESTMENTFOREIGN INVESTMENTFUND MANAGERSGLOBAL DEVELOPMENT FINANCEGOVERNMENT BONDGOVERNMENT BONDSGOVERNMENT DEBTGOVERNMENT PAPERHOLDINGSHOLDINGS OF BANKINDEXED BONDSINFLATIONINFLATION RISKINFLATION RISKSINSTITUTIONAL INVESTORINSTITUTIONAL INVESTORSINSURANCEINSURANCE COMPANIESINTEREST RATEINTEREST RATE DERIVATIVESINTERNATIONAL BANKINTERNATIONAL DIVERSIFICATIONINTERNATIONAL ECONOMICSINTERNATIONAL FINANCIAL MARKETSINTERNATIONAL PORTFOLIOINTERNATIONAL SETTLEMENTSINVESTINGINVESTMENT BEHAVIORINVESTMENT HORIZONINVESTMENT HORIZONSINVESTMENT INSTRUMENTSINVESTMENT OPPORTUNITIESINVESTMENT PORTFOLIOINVESTMENTS IN EQUITYINVESTOR BASEINVESTOR DEMANDINVESTOR REDEMPTIONSISSUANCEISSUANCESLEVEL OF CONFIDENCELIABILITYLIFE INSURANCELIFE INSURANCE COMPANIESLIFE INSURANCE COMPANYLIQUID ASSETSLIQUIDATIONSLIQUIDITYLIQUIDITY CRISESLIQUIDITY RATIOLOCAL CURRENCYLONG-TERM ASSETSLONG-TERM CAPITALLONG-TERM DEBTLONG-TERM DEBT MARKETLONG-TERM FINANCELONG-TERM INSTRUMENTSLONG-TERM INVESTMENTLONG-TERM INVESTMENTSLONG-TERM INVESTORSLONG-TERM LIABILITIESLONG-TERM PAPERMARK TO MARKETMARK-TO-MARKETMARK-TO-MARKET ACCOUNTINGMARKET CONDITIONSMARKET LIQUIDITYMARKET MECHANISMMARKET PARTICIPANTSMARKET PLAYERSMARKET PRICESMATURITIESMATURITYMATURITY DATEMATURITY SPECTRUMMATURITY STRUCTUREMATURITY STRUCTURESMONETARY POLICYMONEY MARKETMONEY MARKET INSTRUMENTMORAL HAZARDMORTGAGESMUTUAL FUNDMUTUAL FUND INDUSTRYMUTUAL FUND MANAGERSMUTUAL FUNDSOPEN-END FUNDSOPPORTUNITY COSTOUTSTANDING DEBTPENSIONPENSION FUNDPENSION FUNDSPENSION REFORMPENSION REFORMSPENSION SYSTEMPENSION SYSTEMSPENSIONSPORTFOLIOPORTFOLIO CHOICEPORTFOLIO HOLDINGSPORTFOLIO INVESTMENTSPORTFOLIO REGULATIONSPORTFOLIOSPRICE RISKPRINCIPAL-AGENT PROBLEMPRINCIPAL-AGENT PROBLEMSPUBLIC FINANCEPUBLIC SAVINGSRATE OF RETURNREGULATORY PRACTICESRETAIL INVESTORSRETIREMENT INCOME SECURITYRETURNRETURNSRISK AVERSIONRISK EXPOSURERISK FACTORSRISK PROFILERISK PROFILESSECURITIESSECURITIES MARKETSSHORT MATURITIESSHORT MATURITYSHORT-TERM ASSETSHORT-TERM ASSETSSHORT-TERM BONDSSHORT-TERM DEBTSHORT-TERM INSTRUMENTSSOVEREIGN BONDSSOVEREIGN DEBTSTOCKSTOTAL DEBTTRADINGTRANCHETRANCHESTRANSACTIONTRANSACTION COSTSTRANSPARENCYTREASURYTURNOVERTYPE OF INVESTORYIELD CURVE10.1596/1813-9450-6922