The Good or the Bad? Which Mutual Fund Managers Join Hedge Funds?

Review for Financial Studies, Forthcoming

AFA 2010 Atlanta Meetings Paper

22 Pages Posted: 22 Mar 2009 Last revised: 29 Jun 2011

Prachi Deuskar

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

Lu Zheng

University of California, Irvine - Paul Merage School of Business

Date Written: March 10, 2011

Abstract

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.

Keywords: Mutual Funds, Hedge Funds, Managerial Turnover

JEL Classification: G23, G29

Suggested Citation

Deuskar, Prachi and Pollet, Joshua Matthew and Wang, Zhi Jay and Zheng, Lu, The Good or the Bad? Which Mutual Fund Managers Join Hedge Funds? (March 10, 2011). Review for Financial Studies, Forthcoming; AFA 2010 Atlanta Meetings Paper. Available at SSRN: https://ssrn.com/abstract=1362629

Prachi Deuskar (Contact Author)

Indian School of Business ( email )

Hyderabad, Gachibowli 500 019
India

Joshua Matthew Pollet

University of Illinois at Urbana-Champaign - Department of Finance ( email )

1206 South Sixth Street
Champaign, IL 61820
United States
(217) 344-4311 (Phone)

Zhi Jay Wang

University of Oregon - Charles H. Lundquist School of Business ( email )

1208 University of Oregon
Eugene, OR 97403-1208
United States

Lu Zheng

University of California, Irvine - Paul Merage School of Business ( email )

Irvine, CA California 92697-3125
United States
9498248365 (Phone)

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