Posted: 26 Jun 2008
Date Written: April 2008
We examine intrafirm competition in the mutual-fund industry. We test the hypothesis that fund managers within mutual-fund families compete with each other in a tournament. Our empirical study of the US equity mutual-fund market shows that they adjust the risk they take depending on the relative position within their fund family. The direction of the adjustment depends on the competitive situation in that family. Risk adjustments are particularly pronounced among managers of funds with high expense ratios, which are managed by a single manager and which belong to large families.
Keywords: G20, G23, J49
Suggested Citation: Suggested Citation
Kempf, Alexander and Ruenzi, Stefan, Tournaments in Mutual-Fund Families (April 2008). Review of Financial Studies, Vol. 21, Issue 2, pp. 1013-1036, 2008. Available at SSRN: https://ssrn.com/abstract=1151584 or http://dx.doi.org/hhm057