Investment funds report periodic return performance, usually compared to a benchmark. However, under ICAPM intertemporal investing theory, investors are not just concerned with the current return. Rather, they look to fund performance as a projection to the future, and that involves...

A fund's performance is usually compared to the performance of an index or other funds. If a fund trails the benchmark, the fund manager is often replaced. We argue that this may lead to excessive risk-taking if fund managers differ in ability and have the opportunity to take excessive risk. To...