The Good or the Bad? Which Mutual Fund Managers Join Hedge Funds?
Indian School of Business
Joshua Matthew Pollet
University of Illinois at Urbana-Champaign - Department of Finance
Zhi Jay Wang
University of Oregon - Charles H. Lundquist School of Business
University of California, Irvine - Paul Merage School of Business
March 10, 2011
Review for Financial Studies, Forthcoming
AFA 2010 Atlanta Meetings Paper
Does the mutual fund industry lose its best managers to hedge funds? We find that mutual funds are able to retain managers with good performance in the face of competition from a growing hedge fund industry. On the other hand, poor performers are more likely to leave the mutual fund industry. A small fraction of these poor performers find jobs with smaller and younger hedge fund companies, especially when the hedge fund industry is growing rapidly. Analogously, a small fraction of the better performing mutual fund managers are retained by allowing them to manage a hedge fund side-by-side.
Number of Pages in PDF File: 22
Keywords: Mutual Funds, Hedge Funds, Managerial Turnover
JEL Classification: G23, G29
Date posted: March 22, 2009 ; Last revised: June 29, 2011