A widespread concern in the investment industry is whether commonly used investment management fee arrangements encourage investment managers to act in their clients' interests. The value to managers of a one-period call performance fee is maximized by maximizing performance volatility. This is...

One prominent aspect of the MiFID II regulation that became effective in Europe in 2018 is the unbundling of research and execution costs. We exploit the early adoption of this rule in Sweden already in 2016 to provide early evidence on the implications for fund investors. Using a diff-in-diff...

60% of the ESG mutual funds introduced after 2013 are managed by teams that also manage non-ESG funds. The co-managed non-ESG funds increase their holdings of high ESG stocks and exhibit superior performance among these stocks, reflecting an ability to cherry-pick the best ideas. Despite being...

Using hand-collected fund manager race data, we study the current status of minority managers in the mutual fund industry. We investigate manager characteristics and performance differences between the minority (Asian, Black, Hispanic Latino) and White managers. Our results show that minorities...

Benchmark following and portfolio rebalancing effects have often been cited when trying to explain international financial contagion phenomena. Using a dataset containing the country allocation of individual dedicated emerging market equity funds, we assess the relevance of mean-variance...

Today mutual funds represent the most appropriate opportunity for most small investors. As financial markets become more sophisticated and complex, investors need a financial intermediary who provides the required knowledge and professional expertise on successful investing. It is no wonder then...

We ask whether a portfolio of large-cap mutual funds in India generates any diversification benefits as compared to holding a single large-cap index tracking exchange-traded fund. Using a mix of traditional measures like correlation and covariance of excess returns, and measures like tracking...

Although bonds are less volatile than equities and the median bond fund holds about 200 bonds, bond investors still need to hold more than one bond fund to realize the optimal benefit of diversification. The simulation results show that three to five bond funds reduce standard deviation of...

The mutual funds' returns, inter alia, are dependent on fund managers' performance. This makes human capital efficiency very central for consistent risk-adjusted performance. The persistence in performance becomes more critical during periods of high turbulence, like the one we are experiencing...