49 Pages Posted: 16 Aug 2011 Last revised: 4 Oct 2016
Date Written: October 3, 2016
Mutual fund companies frequently assign multiple funds to one portfolio manager. This study examines the consequences of such “multitasking” arrangements. We find that, despite fund companies choosing more qualified managers to run multiple funds, multitasking is associated with underperformance relative to single-tasking funds. We attribute this finding to greater distraction of managers since underperformance is more pronounced when managers are responsible for more funds or strategies. Further supporting the distraction hypothesis, multitasking managers devote less effort to their funds. Despite this underperformance, multitasking arrangements benefit fund companies as they initially attract greater capital flows and help to retain portfolio managers.
Keywords: Mutual Fund, Fund Manager, Multitasking, Fund Performance, Agency Problems
JEL Classification: G10, G20, G23
Suggested Citation: Suggested Citation
Agarwal, Vikas and Ma, Linlin and Mullally, Kevin, Managerial Multitasking in the Mutual Fund Industry (October 3, 2016). Available at SSRN: https://ssrn.com/abstract=1910367 or http://dx.doi.org/10.2139/ssrn.1910367