Institutional investors

We analyze asset allocation decisions of different investor types and investigate how these choices change with varying macroeconomic conditions. We consider private, commercial and institutional investors and regress their relative shares of stock and bond holdings on business condition indicators. The data include monthly portfolio holdings deposited in Swiss banks over the time period from November 1998 to November 2004. Our results provide evidence for substantial investment heterogeneity between the types considered. While private and commercial investors hold relatively less equity and bonds in their portfolio with an expected downturn, institutions increase their relative stock holdings with weaker economic prospects. Furthermore, private and commercial investors base their asset allocation decision on the past behavior of institutional investors