Managerial Multitasking in the Mutual Fund Industry

Abstract

Managerial multitasking has become a common practice in the mutual fund industry. Although
multitasking may have certain benefits for fund companies and portfolio managers, these
arrangements have significant drawbacks for fund investors. We find that multitasking is
associated with worse fund performance. Moreover, we find significant performance deterioration
when single-tasking managers begin multitasking. We further provide evidence that multitasking
limits the investment options of the fund managers or reduces the attention they allocate to their
funds. Our study prescribes caution when assigning a portfolio manager with a greater workload
as doing so adversely affects fund performance and, at some point, the ability of the fund family
to attract capital.

Keywords: Multitasking, Fund Performance, Fund Flows, Agency Problems

JEL Classification: G10, G20, G23