Abstract

http://ssrn.com/abstract=2024027
 
 

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Portfolio Manager Compensation in the U.S. Mutual Fund Industry


Linlin Ma


Northeastern University

Yuehua Tang


Singapore Management University - Lee Kong Chian School of Business

Juan-Pedro Gomez


IE Business School

March 2, 2015

Finance Down Under 2014 Building on the Best from the Cellars of Finance

Abstract:     
Using a hand-collected data set of over 5,000 mutual funds, we study the compensation structures of individual portfolio managers in the U.S. mutual fund industry. About three-quarters of portfolio managers receive performance-linked bonuses from investment advisors. Managers with performance-linked bonuses exhibit superior subsequent fund performance, especially when advisors link pay to performance over a longer time period. In contrast, alternative compensation arrangements, such as fixed salary, assets-based pay, or advisor-profits-based pay are not associated with superior performance. Overall, our study documents novel empirical evidence on the impact of individual portfolio manager compensation on mutual fund performance.

Number of Pages in PDF File: 59

Keywords: Portfolio manager compensation, mutual funds, investment advisors, fund performance

JEL Classification: G23, J33


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Date posted: March 18, 2012 ; Last revised: March 14, 2015

Suggested Citation

Ma, Linlin and Tang, Yuehua and Gomez, Juan-Pedro, Portfolio Manager Compensation in the U.S. Mutual Fund Industry (March 2, 2015). Finance Down Under 2014 Building on the Best from the Cellars of Finance. Available at SSRN: http://ssrn.com/abstract=2024027 or http://dx.doi.org/10.2139/ssrn.2024027

Contact Information

Linlin Ma
Northeastern University ( email )
Boston, MA 02115
United States
617-373-4569 (Phone)
Yuehua Tang (Contact Author)
Singapore Management University - Lee Kong Chian School of Business ( email )
50 Stamford Road
Singapore, 178899
Singapore
+65 6808-5475 (Phone)
+65 6828-0427 (Fax)
HOME PAGE: http://sites.google.com/site/yuehuatang/

Juan-Pedro Gomez
IE Business School ( email )
Maria de Molina 12
Madrid, 28006
Spain
34 91 7821326 (Phone)
34 91 7454762 (Fax)
HOME PAGE: http://www.ie.edu/JPGomez
Feedback to SSRN


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