Actively managed mutual funds exhibit heterogeneous and time-varying returns to fund and industry scale. When a fund starts out, it exhibits increasing returns to scale (IRS) to industry size and decreasing returns to scale (DRS) to fund size. As funds get older and larger, industry size IRS...

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 paper examines investment allocations in emerging markets by actively-managed U.S. mutual funds. We analyze both country- and firm-level characteristics and policies that influence these investment allocations. At the country-level, we find that U.S. funds invest more in open emerging...

We find that active mutual funds owning product market competitors have superior risk-adjusted returns that are not driven by industry concentration, common selection, or stock picking ability. These funds charge higher fees but also generate persistent net-of-fee returns for investors. Funds...

This paper investigates how precautionary trading behavior of fund managers induced by a higher junior fee component in their compensation structure affects prices of downgraded loans in the leveraged loans market. Using detailed portfolio data from Collateralized Loan Obligation (CLO) funds, we...

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...

Venture capital (VC) funds backed by large multi-fund families tend to perform substantially better due to cross-fund cash flows (CFCFs), a liquidity support mechanism provided by matching distributions and capital calls within a VC fund family. The dynamics of this mechanism coincide with the...

We examine whether ESG funds’ investment decisions are sensitive to firms’ environmental disclosures, beyond summary ESG ratings. We create our measures of environmental disclosure using bigrams extracted from the Global Reporting Initiative (GRI) standards trained against authoritative...

In recent decades, investors have wielded their voting power to influence the direction of corporate policy. Although mutual funds have widely varying voting patterns and predictable ideological disagreements, little is known about whether their underlying investors have similar preferences. I...