Abstract

http://ssrn.com/abstract=1567267
 
 

References (49)



 


 



The Invisible Hand of Internal Markets in Mutual Fund Families


Luis Goncalves-Pinto


National University of Singapore

Juan M. Sotes-Paladino


University of Melbourne - Department of Finance

May 1, 2016


Abstract:     
The internal markets of fund families can induce member funds to deviate excessively from their investment mandates. Theoretically, we show that fund managers who follow sufficiently different style benchmarks are likely to engage in risk-shifting by trading with one another at low cost inside their family. This benefits the managers and the family even in the absence of a family-level strategy. However, the excessive risks taken by the managers can be costly to fund investors. Empirically, we find support for the positive effect of intra-family style diversity on offsetting trades across funds and on deviations of funds' portfolios from their benchmarks.

Number of Pages in PDF File: 63

Keywords: Mutual Fund Families, Cross-trading, Portfolio Delegation, Illiquidity

JEL Classification: C61, D60, D81, G11, G12, G23


Open PDF in Browser Download This Paper

Date posted: March 10, 2010 ; Last revised: May 1, 2016

Suggested Citation

Goncalves-Pinto, Luis and Sotes-Paladino, Juan M., The Invisible Hand of Internal Markets in Mutual Fund Families (May 1, 2016). Available at SSRN: http://ssrn.com/abstract=1567267 or http://dx.doi.org/10.2139/ssrn.1567267

Contact Information

Luis Goncalves-Pinto (Contact Author)
National University of Singapore ( email )
Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore
HOME PAGE: http://luis.goncalvespinto.com
Juan M. Sotes-Paladino
University of Melbourne - Department of Finance ( email )
Faculty of Economics and Commerce
Parkville, Victoria 3010 3010
Australia
+61 3 9035 9827 (Phone)
+61 3834 6914 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 2,252
Downloads: 241
Download Rank: 92,139
References:  49

© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollobot1 in 2.469 seconds