Outside Ownership in the Hedge Fund Industry
47 Pages Posted: 4 Sep 2015 Last revised: 30 Mar 2022
Date Written: October 23, 2019
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: Suggested Citation