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Good Stewards, Cheap Talkers, or Family Men? The Impact of Mutual Fund Closures on Fund Managers, Flows, Fees, and PerformanceHuseyin GulenPurdue University - Krannert School of Management Raghavendra RauUniversity of Cambridge; UC Berkeley - Haas School of Business Arturo BrisIMD International; European Corporate Governance Institute (ECGI); Yale University - International Center for Finance Padmaja KadiyalaPace University - Lubin School of Business Review of Financial Studies, Vol. 20, No. 3, pp. 953-982, 2007 Abstract: We examine a sample of 125 equity mutual funds that closed to new investment between 1993 and 2004. We find that funds close following a period of superior performance and abnormal fund inflows. Fund managers raise their fees when they close to compensate managers for losses in income due to the restrictions in size imposed by the fund closure decision. Managers reopen when fund size declines. However, they do not earn superior returns after re-opening, suggesting that the fund closure decision does not provide information about superior fund managers.
Keywords: Mutual funds, Fund flows, Fund size, Fund returns, Fund manager performance Accepted Paper SeriesDate posted: May 10, 2006 ; Last revised: March 4, 2008Suggested CitationContact Information
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