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File name: SSRN-id2212854. ; Size: 283K
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Measuring Skill in the Mutual Fund Industry
Jonathan Berk
Stanford University - Graduate School of Business; National Bureau of Economic Research (NBER)
Jules H. Van Binsbergen
Stanford University - Graduate School of Business; National Bureau of Economic Research (NBER)
August 23, 2012
Abstract:
Using the dollar-value that a mutual fund adds as the measure of skill, we find that the average mutual fund adds about $2 million per year and that this skill persists for as long as 10 years. We further document that investors recognize this skill and reward it by investing more capital with better funds. Better funds earn higher aggregate fees, and there is a strong positive correlation between current compensation and future performance.
Number of Pages in PDF File: 51
Keywords: Mutual Funds, Skill, Rents, Compensation
JEL Classification: G2, J31
working papers series
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Date posted: April 11, 2012
; Last revised: February 10, 2013
Suggested CitationBerk, Jonathan B. and Van Binsbergen, Jules H., Measuring Skill in the Mutual Fund Industry (August 23, 2012). Available at SSRN: http://ssrn.com/abstract=2038108 or http://dx.doi.org/10.2139/ssrn.2038108
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