Abstract

http://ssrn.com/abstract=2024027
 
 

Citations (2)



 


 



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

August 18, 2013

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

Abstract:     
Using a unique hand-collected dataset of over 4,000 mutual funds, we study the compensation structures of individual portfolio managers in the U.S. mutual fund industry. About three-quarters of the portfolio managers in our sample receive performance-linked pay from investment advisors. Managers with performance-based compensation exhibit superior fund performance, especially when advisors link pay to performance over longer time periods. By contrast, we do not find that alternative compensation arrangements such as pay linked to fund assets or advisor profits are associated with better fund performance. Performance-linked pay is more prevalent among larger investment advisors, non-stakeholder portfolio managers, portfolio management teams, and in-house managed funds. Overall, our study provides novel empirical evidence on portfolio manager compensation in the mutual fund industry.

Number of Pages in PDF File: 52

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

JEL Classification: G23, J33

working papers series


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Date posted: March 18, 2012 ; Last revised: November 14, 2013

Suggested Citation

Ma, Linlin and Tang, Yuehua and Gomez, Juan-Pedro, Portfolio Manager Compensation in the U.S. Mutual Fund Industry (August 18, 2013). 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 )
Castellón de la Plana 8
Madrid 28006
Spain
34 91 7821326 (Phone)
34 91 7454762 (Fax)
HOME PAGE: http://www.ie.edu/JPGomez
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