We examine how liquidity and return concerns at large mutual funds explain their diminished participation in small IPOs since the late 1990s. Using 5,825 IPOs and portfolio-level information for 37,052 funds, we exploit Russia's 1998 debt default as an exogenous shock to funds' liquidity...

This article discusses the definition and determinants of capacity, and outlines a practical approach for analyzing the capacity of equity funds. It is argued that capacity analysis should focus on ‘effective capacity' for the active component of a portfolio, defined as the assets under...

We analyze the relationship between contracts and returns in private equity (PE) investments. Contractual control in the form of covenants tends to be employed to identify good deals. Better quality firms are more likely to have covenant-rich contracts, as they are less concerned by the...

Using a comprehensive dataset of Finnish males, we study IQ's influence on mutual fund choice. High-IQ investors are less likely to own categories of funds that tend to charge higher fees — including balanced funds, actively managed funds, and funds marketed through a retail network. Moreover,...

The Italian mutual fund industry is in a severe crisis: its net assets have been experiencing a constant decrease since 1999, from 42% of GDP to 8% in 2011. Its returns are poor, too. An investment in mutual funds has accumulated in its 28-year life a loss larger than the initial asset value, if...

We provide evidence that bond fund managers misclassify their holdings, and that these misclassifications have a real and significant impact on investor capital flows. In particular, many funds report more investment grade assets than are actually held in their portfolios to important...

In this paper, I investigate the asset allocation ability of mutual fund investors. Specifically, I examine differences among non-proprietary brokers, proprietary brokers and direct channels regarding their asset allocation ability. In aggregate, mutual fund investors do not seem to have...

Suppose funds managers are differentiated by intrinsic or innate ability at some origin point in time. Using formal theoretical propositions, and with risk continuously increasing, the continuum of assets available to funds managers is endogenously segmented into continuums of `safe', and...

If a bidder launches a takeover offer for a listed company being part of a stock market index, then index funds and exchange traded funds (ETF) as shareholders of this company cannot easily tender their shares without losing track of the index. This paper analyzes the impact of index fund and...

When a private equity firm raises a larger fund, performance tends to decline. This pattern is usually interpreted as evidence of decreasing returns. I propose a more innocuous explanation: high-growth private equity firms were on average lucky in the past and therefore are expected to...