Posted: 10 May 2006 Last revised: 4 Mar 2008
We examine a sample of 125 equity mutual funds that closed to new investment between 1993 and 2004. We find that funds close following a period of superior performance and abnormal fund inflows. Fund managers raise their fees when they close to compensate managers for losses in income due to the restrictions in size imposed by the fund closure decision. Managers reopen when fund size declines. However, they do not earn superior returns after re-opening, suggesting that the fund closure decision does not provide information about superior fund managers.
Keywords: Mutual funds, Fund flows, Fund size, Fund returns, Fund manager performance
Suggested Citation: Suggested Citation
Gulen, Huseyin and Rau, P. Raghavendra and Bris, Arturo and Kadiyala, Padmaja, Good Stewards, Cheap Talkers, or Family Men? The Impact of Mutual Fund Closures on Fund Managers, Flows, Fees, and Performance. Review of Financial Studies, Vol. 20, No. 3, pp. 953-982, 2007. Available at SSRN: https://ssrn.com/abstract=900303