Outside Ownership in the Hedge Fund Industry

47 Pages Posted: 4 Sep 2015 Last revised: 30 Mar 2022

Date Written: October 23, 2019

Abstract

I examine one action hedge fund managers take to increase their assets under management: by selling ownership stakes in their firms to outside owners. Fund companies that sell stakes to outside owners open more new funds and attract higher fund flows. The flow impact is greater for funds who sell stakes to more reputable outside owners and outsiders with asset management divisions. Funds with outside owners do not subsequently outperform their peers. Despite the lack of subsequent outperformance, fund investors do benefit from a reduction in returns management. Taken together, my results indicate that these transactions result in synergies for all parties involved.

Keywords: Hedge funds; growth; ownership; governance

JEL Classification: G23, D83, L25

Suggested Citation

Mullally, Kevin, Outside Ownership in the Hedge Fund Industry (October 23, 2019). Available at SSRN: https://ssrn.com/abstract=2654783 or http://dx.doi.org/10.2139/ssrn.2654783

Kevin Mullally (Contact Author)

University of Central Florida ( email )

412 CBA
Orlando, FL 32827
United States
407-823-2360 (Phone)

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