Leveling the Playing ﬁeld? the Eﬀect of Disclosing Fund Manager Activeness to Individual Investors
Journal of Banking and Finance, Available online 4 June 2023, 106915 https://doi.org/10.1016/j.jbankfin.2023.106915
62 Pages Posted: 9 Mar 2022 Last revised: 14 Jun 2023
Date Written: March 4, 2022
As of April 2018, several of the largest U.S. mutual fund ﬁrms have been imposed to disclose a measure of fund manager activeness to retail investors. We evaluate the eﬀectiveness of this intervention. We ﬁnd that, even for those funds with a large overlap of holdings with the benchmark, no measurable eﬀort to increase management activeness can be observed subsequent to the imposed disclosure. By contrast, investors strongly respond to the intervention. However, an analysis of investor reaction suggests that they do not rationally trade on the newly available information. We discuss our results and propose potential disclosure improvements.
Keywords: Mutual fund manager activeness, investor protection, disclosure eﬀectiveness, regulation, retail ﬁnance
JEL Classification: D12, D18, G18, G41
Suggested Citation: Suggested Citation