The Company You Keep: Investment Manager Clientele and Mutual Fund Performance
72 Pages Posted: 21 Nov 2017 Last revised: 17 Apr 2019
Date Written: April 15, 2019
This paper examines how the composition of an investment adviser’s client base (identified via Form ADV filings) relates to the performance of its mutual funds. Investment advisers catering to institutional clients realize statistically and economically superior risk-adjusted mutual fund performance relative to retail-oriented advisers. The findings are consistent with the empirical predictions of the Gârleanu and Pedersen (2018) model for asset management markets. The results suggest that institutional clients can identify differences in investment manager skill, particularly in market segments where retail mutual fund investors face higher search costs.
Keywords: Investment advisers, mutual funds, institutional investors, Form ADV
JEL Classification: G11, G23
Suggested Citation: Suggested Citation