Portfolio Manager Ownership and Mutual Fund Performance

This paper examines the association between a mutual fund manager's personal fund investment and mutual fund performance. My database of newly-released managerial ownership disclosures reveals that fund ownership levels vary across mutual fund managers and, in many instances, are quite large. I find that mutual fund returns are increasing in the level of managerial fund investment, consistent with personal ownership realigning decision-maker and shareholder interests. Also consistent with the reduction of agency costs of the type set forth in Dow and Gorton (1997), I find that managerial ownership is inversely related to fund turnover