Managerial multitasking in the mutual fund industry

We examine the determinants and consequences of the multitasking phenomenon in the mutual fund industry where fund managers simultaneously manage multiple funds. We show that wellperforming managers multitask either by taking over poorly performing funds within fund companies (i.e., acquired funds) or by launching new funds. We find that funds managed by managers prior to multitasking (i.e., incumbent funds) experience significant performance deterioration subsequent to multitasking while the performance of the acquired funds improves. Although there is no change in the investor flows into the incumbent funds, the acquired funds and new funds attract greater investor flows. As a result, multitasking arrangement increases the assets of fund companies. Taken together, these findings are indicative of potential agency problems associated with managerial multitasking.