Strategic Behavior within Families of Hedge Funds

63 Pages Posted: 18 Nov 2010 Last revised: 21 Nov 2010

Olga Kolokolova

University of Manchester - Manchester Business School

Date Written: October 29, 2010

Abstract

The paper investigates the strategic behavior of hedge fund families. It focuses on decisions to start and liquidate family-member funds. Hedge fund families tend to liquidate funds that underperform compared to other member funds, and to replace them by new ones. By choosing a launch time after a short period of superior performance by their member funds, families extend the spillover to new funds. Hedge fund families seem to be more experienced in promoting their funds and attracting fund inflow than in generating superior performance. This results in higher dollar compensation earned by managers within multi-fund families than in stand-alone funds.

Keywords: Hedge fund families, Investment companies, Fund liquidation, Fund origination

JEL Classification: G23, G11

Suggested Citation

Kolokolova, Olga, Strategic Behavior within Families of Hedge Funds (October 29, 2010). Journal of Banking and Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1709427

Olga Kolokolova (Contact Author)

University of Manchester - Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom
+44-161-306-2081 (Phone)

HOME PAGE: http://www.mbs.ac.uk/research/academicdirectory/profiles/olga.kolokolova.aspx

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