The Exclusive Role of Centralized Fund Family Management
Journal of Financial Services Research, Forthcoming
43 Pages Posted: 8 May 2019 Last revised: 11 May 2019
Date Written: May 7, 2019
Fund families are centrally managed, and can directly control resource allocations between funds. We quantify multiple manageable fund family attributes, and examine their combined eﬀects upon returns and investor ﬂows. We focus upon ﬁve attributes that are exclusively manageable by fund families: marginal fee economies of scale, star fund oﬀerings, mixed high and low risk product oﬀerings, within-family manager scope, and manager outsourcing. We ﬁnd sensitivity diﬀerences during ﬁnancial crisis and non-crisis time periods. Management of these exclusive attributes signiﬁcantly improve a fund family’s returns and investor ﬂows, beneﬁting fund families and their investors during both normal and ﬁnancial crisis periods. We ﬁnd that investors reward fund families with greater performance sensitive inﬂows and weaker performance sensitive outﬂows, indicating that investors identify greater utility in centrally managed fund families.
Keywords: mutual funds, investment performance, non-bank financial institutions
JEL Classification: G23
Suggested Citation: Suggested Citation