Competition and cooperation in mutual fund families

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Abstract

Using manager compensation disclosure and intra-family manager cooperation measures, we create indices of family-level competitive/cooperative incentives. Families that encourage cooperation among their managers are more likely to engage in coordinated behavior (e.g., cross-trading, cross-holding) and have less volatile cash flows. Families with competitive incentives generate higher performing funds, a higher fraction of "star" funds, but greater performance dispersion across funds. In examining the determinants of incentive schemes, competitive families are more likely to manage institutional money, and cooperative families are more likely to distribute through brokers, consistent with retail demand for nonperformance characteristics.
Original languageEnglish
JournalJournal of Financial Economics
DOIs
Publication statusAccepted/In press - 5 Nov 2019

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Mutual funds
Cooperation and competition
Managers
Incentives
Cross-holdings
Broker
Disclosure
Cash flow
Retail
Incentive schemes

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title = "Competition and cooperation in mutual fund families",
abstract = "Using manager compensation disclosure and intra-family manager cooperation measures, we create indices of family-level competitive/cooperative incentives. Families that encourage cooperation among their managers are more likely to engage in coordinated behavior (e.g., cross-trading, cross-holding) and have less volatile cash flows. Families with competitive incentives generate higher performing funds, a higher fraction of {"}star{"} funds, but greater performance dispersion across funds. In examining the determinants of incentive schemes, competitive families are more likely to manage institutional money, and cooperative families are more likely to distribute through brokers, consistent with retail demand for nonperformance characteristics.",
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Competition and cooperation in mutual fund families. / Evans, Richard B.; Porras Prado, Melissa; Zambrana, Rafael.

In: Journal of Financial Economics, 05.11.2019.

Research output: Contribution to journalArticle

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AU - Evans, Richard B.

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