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The Determinants of the Flow of Funds of Managed Portfolios: Mutual Funds vs. Pension Funds

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Author Info
Guercio, Diane Del
Tkac, Paula A.

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Abstract

This study compares the relations between asset flow and performance in the retail mutual fund and fiduciary pension fund segments of the money management industry, and relate empirical differences to fundamental differences in the clientele they serve. A striking difference is the shape of the flow-performance relation. In contrast to mutual fund investors, pension clients punish poorly performing managers by withdrawing assets under management and do not flock disproportionately to recent winners. We interpret these and other empirical differences in the context of the manager evaluation procedures typical in each segment. We conclude that pension managers have little incentive to engage in the risk-shifting behavior previously identified among mutual fund managers.

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Publisher Info
Article provided by Cambridge University Press in its journal Journal of Financial and Quantitative Analysis.

Volume (Year): 37 (2002)
Issue (Month): 04 (December)
Pages: 523-557
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Handle: RePEc:cup:jfinqa:v:37:y:2002:i:04:p:523-557_00

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  1. Luis Ferruz & Luis Vicente & Laura Andreu, 2009. "Performance persistence and its influence on money and investor flows into Spanish pension plans," Review of Quantitative Finance and Accounting, Springer, vol. 32(1), pages 85-100, January. [Downloadable!] (restricted)
  2. Stefan Ruenzi, 2004. "Mutual Fund Growth in Standard and Specialist Market Segments," Finance 0406005, EconWPA, revised 27 Jun 2004. [Downloadable!]
    Other versions:
  3. Patrick E. McCabe, 2009. "The economics of the mutual fund trading scandal," Finance and Economics Discussion Series 2009-06, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  4. Plantinga, Auke, 2007. "Performance Measurement And Evaluation," MPRA Paper 5048, University Library of Munich, Germany. [Downloadable!]
  5. Evans, Richard & Fahlenbrach, Rudiger, 2007. "Do Funds Need Governance? Evidence from Variable Annuity-Mutual Fund Twins," Working Paper Series 2007-17, Ohio State University, Charles A. Dice Center for Research in Financial Economics. [Downloadable!]
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This page was last updated on 2009-12-14.


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