Portfolio Pumping in Mutual Fund Families

53 Pages Posted: 18 Mar 2017 Last revised: 8 Jun 2018

See all articles by Pingle Wang

Pingle Wang

University of Rochester, Simon Business School, Students

Date Written: May 30, 2018

Abstract

I document portfolio pumping at the fund family level, a strategy that non-star fund managers buy stocks held by star funds in the family to inflate their performance at the quarter end. Families that heavily employ the strategy show strong evidence of inflated performance after 2002, when the SEC increased regulation on portfolio pumping at the fund level. Non-star fund managers pumping for star funds in the family receive 1.8% ($24 million) more inflows per quarter, conditional on the performance. Furthermore, pumping is concentrated in stocks that are buried deep down in the holdings of star funds.

Keywords: Mutual Funds, Portfolio Pumping, Family Strategy

JEL Classification: G18, G23, G28, K22

Suggested Citation

Wang, Pingle, Portfolio Pumping in Mutual Fund Families (May 30, 2018). Fifth Annual Conference on Financial Market Regulation. Available at SSRN: https://ssrn.com/abstract=2933600 or http://dx.doi.org/10.2139/ssrn.2933600

Pingle Wang (Contact Author)

University of Rochester, Simon Business School, Students ( email )

Rochester, NY
United States

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