CIA (e)Bulletin/(e)Bulletin de l'ICA
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April 2015
 
 

Social Networks Inspire Investment Decisions

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Social media sites are playing an increasingly important role in institutional investors’ decisions, according to a new study.

Greenwich Associates and its partner, LinkedIn, discovered that almost 80 per cent of institutional investors use sites like Twitter and LinkedIn as part of their regular work flow, and approximately 30 per cent of these investors said information received via social media has directly influenced an investment recommendation or decision.

The study, which can be requested here, found that almost every institutional investor used social media (79 percent of them at work), and that when they found insightful information they took action, whether by sharing it, making an investment decision, or deciding to work with a particular company. It also reports that 48 per cent of investors said that information from social media prompted them to do additional research on an industry issue or topic.

Greenwich’s report, Institutional Investing in the Digital Age: How Social Media Informs and Shapes and Investing Process, involved 256 participants from pension plans, insurers, and foundations and endowments in the U.S., Europe, and Asia. The organizations varied from those holding less than $250 million in assets to others holding $10 billion.

The study also found that:

  • LinkedIn is the preferred source, with 52 percent penetration among institutional investors;
  • Facebook and YouTube are increasingly being used for group discussion and companies’ video distribution (see the CIA’s own Facebook and YouTube channels);
  • Institutions used Twitter (here is the CIA’s Twitter feed) to seek opinions or commentary on market events—although they preferred the more targeted feeds on LinkedIn (follow the CIA on LinkedIn here); and
  • Participants in Asia are consistently higher users of social media than those in North America and Europe.

Study author Dan Connell said: "These results show that social media is influencing decisions that can result in the allocations of billions of investment dollars around the world. With approximately 40 percent of the institutions globally expecting to increase their use of social media in the coming year, we’re projecting a further, rapid increase of social media influence in institutional investment markets."

 

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