This paper reveals that mutual fund managers manipulate Morningstar ratings by inflating their month-end portfolio values when they are likely to finish the month near rating cutoffs. This star rating manipulation is more pronounced among small-cap funds, single-managed funds, funds with a...

This Article analyzes the conduct of mutual funds in shareholder litigation. We begin byreviewing the basic forms of shareholder litigation and the benefits such claims might offermutual fund investors. We then investigate, through an in-depth docket review, whetherand how the ten largest mutual...

This Article offers a theory of mutual fund voting to answer when mutual funds should vote on behalf of their investors and when they should not. It argues that voting authority for mutual funds ought to depend upon: (1) whether the fund possesses a comparative informational advantage, and (2)...

This chapter for an upcoming handbook on mutual funds (by Edward Elgar Publishing) offers an overview of the mutual fund market and the investors who inhabit it. On the supply side, mutual funds hold $16 trillion in financial assets and have become the largest component of our private retirement...

The proposition that a prudent investor should be diversified is widely accepted if not incontrovertible for ordinary investors – investors who have no reasonable expectation of influencing company management or business policy. Indeed, fiduciary duty requires that trustees and other...

ChatGPT has risen rapidly to prominence due to its unique features and generalization ability. This article proposes using ChatGPT to assist small investment funds, particularly small passive funds, in making more accurate and informed proxy voting decisions.Passive funds adopt a low-cost...

Corporate America today is astonishingly beholden to three large financial institutions: BlackRock, Vanguard, and State Street Global Advisors. As investors have moved their money into low cost, highly-diversified investment vehicles known as index funds, the so-called “Big Three”...

We use a new data set to study the determinants of the performance of open-end actively managed equity mutual funds in 27 countries. We find that mutual funds underperform the market overall. The results show important differences in the determinants of fund performance in the U.S. and elsewhere...

Although the 1940 Act restricts interfund lending (i.e., a fund lending to other funds belonging to the same mutual fund family), fund families can obtain permission from the regulators to set up interfund lending programs. We analyze the determinants and consequences of such programs. We find...

Although the 1940 Act restricts interfund lending within a mutual fund family, families can apply for exemptions from the regulator to participate in interfund lending. We find that heterogeneity in portfolio liquidity and investor flows across funds, funds' investment restrictions, and...