We compare fund flows and asset valuations of bond mutual funds whose managers concurrently manage portfolios with performance-based fees and those whose managers do not. We find that bond mutual funds whose managers concurrently manage portfolios with performance-based fees receive less fund...

A low-interest rate environment induces higher demand for income-generating assets, such as high-dividend stocks and high-coupon bonds. In this paper, we explore the impact of this “reaching-for-income” phenomenon on fund flows of corporate bond mutual funds. We find that high...

Mutual funds' exposure to corporate bonds has brought concerns about risks arising from liquidity transformation back to the fore. With a focus on fund asset liquidity and investors, this paper explores the flow-performance relationship and the liquidity management of funds in the presence of...

We show that supply side effects arising from the bond holdings of open-end mutual funds affect corporate credit risk. In our model, funds exposed to flow-performance relationships are reluctant to refinance bonds of companies with poor cash flow prospects fearing future investor outflows as a...

Mutual funds' exposure to corporate bonds has brought concerns about risks arising from liquidity transformation back to the fore. With a focus on fund asset liquidity and investors, this paper explores the flow-performance relationship and the liquidity management of funds in the presence of...