Influence of Investors' Monitoring on Equity Mutual Funds' Performance

Revista de Gestão, Finanças e Contabilidade v. 7, n. 2, (May/Aug 2017): 79-101.

23 Pages Posted: 6 Mar 2018

See all articles by Renato Lazo

Renato Lazo

University of Ottawa - Telfer School of Management; Federal University of Minas Gerais (UFMG) - Center for Post Graduation and Research in Administration (CEPEAD)

Robert Aldo Iquiapaza

Federal University of Minas Gerais (UFMG) - Center for Post Graduation and Research in Administration (CEPEAD)

Aureliano A. Bressan

Federal University of Minas Gerais (UFMG) - Center for Post Graduation and Research in Administration (CEPEAD)

Date Written: July 31, 2017

Abstract

This paper analyzes the effect of investor monitoring on the performance of equity investment funds. For that purpose, we analyze the relationship between fund performance, measured using four-factor Alpha, and a set of control variables and monitoring proxy variables. We used monthly data for 1.317 funds, from January 2005 to April 2015. We organized the sample data into two subsamples, retail and institutional funds, to compare the performance of those funds whose clienteles presents, in principle, different monitoring capacities. Institutional funds presented superior performance compared to retail funds measured by net annual return as well as by four-factor Alpha. The variables investment, measured as the minimum initial investment requirement, and type of manager were statistically significant in the retail funds sample. The results show that greater capacity to monitor fund manager behavior could diminish the occurrence of activities against investor’s interests, which is one of the main contributions of this research.

Keywords: Equity investment funds, Monitoring, Performance, Retail investor, Institutional investor

JEL Classification: G23

Suggested Citation

Lazo, Renato and Iquiapaza, Robert Aldo and Bressan, Aureliano Angel, Influence of Investors' Monitoring on Equity Mutual Funds' Performance (July 31, 2017). Revista de Gestão, Finanças e Contabilidade v. 7, n. 2, (May/Aug 2017): 79-101., Available at SSRN: https://ssrn.com/abstract=3130742

Renato Lazo

University of Ottawa - Telfer School of Management ( email )

136 Jean-Jacques Lussier Street
Ottawa, Ontario K1N 6N5
Canada

Federal University of Minas Gerais (UFMG) - Center for Post Graduation and Research in Administration (CEPEAD) ( email )

Rua Curitiba 832 11º And Centro
Belo Horizonte, MG 30120170
Brazil

Robert Aldo Iquiapaza (Contact Author)

Federal University of Minas Gerais (UFMG) - Center for Post Graduation and Research in Administration (CEPEAD) ( email )

Av. Antônio Carlos 6627 - Pampulha
Faculdade de Ciências Econômicas
Belo Horizonte, MG 31270-901
Brazil

HOME PAGE: http://www.cepead.face.ufmg.br

Aureliano Angel Bressan

Federal University of Minas Gerais (UFMG) - Center for Post Graduation and Research in Administration (CEPEAD) ( email )

Av. Antonio Carlos, 6627
MG30170-120 Belo Horizonte, 31270-901
Brazil

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