Success and Failure on the Corporate Bond Fund Market
43 Pages Posted: 2 Aug 2014 Last revised: 24 Nov 2017
Date Written: November 22, 2017
We present the first broad overview of the factors determining corporate bond fund success and failure in terms of: survival, flow and performance. The main determinant of survival is size. Performance matters only for small funds while large funds survive unconditionally, consistent with maintaining fee revenues. Corporate bond fund investors chase performance, but only of large funds. We neither find persistence in performance nor diseconomies of scale. The latter is due to advantages of larger funds in corporate bond trading. Thus, there are similarities but also important differences between the success factors on the corporate bond and equity fund markets.
Keywords: Corporate bond funds, performance, disappearance and survival, fund size, flow
JEL Classification: G11, G12
Suggested Citation: Suggested Citation