Managerial Skill and Closed-End Fund Discounts

Financial Markets and Portfolio Management, Vol. 24, No. 4, pp. 441-451, 2010

Posted: 20 Dec 2010

See all articles by Michael Bleaney

Michael Bleaney

University of Nottingham - School of Economics

R. Todd Smith

University of Alberta

Date Written: October 8, 2010

Abstract

Empirical evidence from the UK market is examined in the light of recent theories about closed-end fund discounts. Market pricing of skill, relative to the fees charged for it, accounts for a significant portion of discount variation, but cannot explain the rarity of index funds or why they trade at a discount, since fees tend to be lower than on open-end funds. Index funds have lower discount volatility, consistent with the skill hypothesis. The results imply that managerial skill, relative to the fees charged, does not wholly account for the tendency of closed-end funds to trade at a discount.

Keywords: Closed-end fund, Fund management, Management fees

JEL Classification: F30, G12

Suggested Citation

Bleaney, Michael and Smith, Richard Todd, Managerial Skill and Closed-End Fund Discounts (October 8, 2010). Financial Markets and Portfolio Management, Vol. 24, No. 4, pp. 441-451, 2010. Available at SSRN: https://ssrn.com/abstract=1728807

Michael Bleaney (Contact Author)

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom
+44 0 115 951 5265 (Phone)
+44 0 115 951 5141 (Fax)

Richard Todd Smith

University of Alberta ( email )

8-14 Tory Building
Edmonton, Alberta T6G 2H4
Canada
403-492-7898 (Phone)
403-492-3300 (Fax)

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