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Management team structure and mutual fund performance

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  • Karagiannidis, Iordanis
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    Abstract

    We investigate the relationship between performance and portfolio management team structure of open-end mutual funds during 1997-2004. We first analyze differences in performance and risk taking between single-manager and multiple-manager mutual funds and find that the latter underperform the single-manager funds in terms of risk-adjusted returns during the 2001-2004 bear market. This underperformance is more evident among growth-oriented funds. There are no differences observed in the 1997-2000 bull market. Not all multiple-manager funds, however, are managed by pure teams. When we compare the performance of single-manager and pure-team funds we do not find any differences in performance. The underperformance of multiple-manager funds documented in previous studies comes from multiple-manager funds that employ many investment advisors and, therefore, their exact management structure is unknown. We also document differences in management structure reporting between Morningstar and CRSP.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of International Financial Markets, Institutions and Money.

    Volume (Year): 20 (2010)
    Issue (Month): 2 (April)
    Pages: 197-211

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    Handle: RePEc:eee:intfin:v:20:y:2010:i:2:p:197-211

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    Web page: http://www.elsevier.com/locate/intfin

    Related research

    Keywords: Mutual funds Team-manager Single-manager Performance;

    References

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    1. Edwin J. Elton, 2001. "A First Look at the Accuracy of the CRSP Mutual Fund Database and a Comparison of the CRSP and Morningstar Mutual Fund Databases," Journal of Finance, American Finance Association, vol. 56(6), pages 2415-2430, December.
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    4. Edwin J. Elton & Martin J. Gruber & Jeffrey A. Busse, 2004. "Are Investors Rational? Choices among Index Funds," Journal of Finance, American Finance Association, vol. 59(1), pages 261-288, 02.
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    6. Stock, Ruth, 2004. "Drivers of Team Performance: What Do We Know and What Have We Still to Learn?," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 35551, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    7. Eric Rasmusen, 1987. "Moral Hazard in Risk-Averse Teams," RAND Journal of Economics, The RAND Corporation, vol. 18(3), pages 428-435, Autumn.
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    11. Stock, Ruth, 2004. "Drivers of Team Performance: What Do We Know and What Have We Still to Learn?," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 60487, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    12. Joseph Chen & Harrison Hong & Ming Huang & Jeffrey D. Kubik, 2004. "Does Fund Size Erode Mutual Fund Performance? The Role of Liquidity and Organization," American Economic Review, American Economic Association, vol. 94(5), pages 1276-1302, December.
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    Cited by:
    1. Karagiannidis, Iordanis, 2012. "The effect of management team characteristics on risk-taking and style extremity of mutual fund portfolios," Review of Financial Economics, Elsevier, vol. 21(3), pages 153-158.
    2. patel, saurin & sarkissian, sergei, 2012. "To Group or Not to Group? Evidence from Mutual Funds," MPRA Paper 38496, University Library of Munich, Germany.
    3. J. Carlos Matallín-Sáez & Amparo Soler-Domínguez & Emili Tortosa-Ausina, 2013. "Does active management add value? New evidence from a quantile regression," Working Papers 2013/01, Economics Department, Universitat Jaume I, Castellón (Spain).
    4. Amparo Soler Domínguez & Juan Carlos Matallín Sáez & Emili Tortosa-Ausina, 2013. "Does active management add value? New evidence from a quantile regression approach," Working Papers. Serie EC 2013-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).

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