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Managerial skill and closed-end fund discounts

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  • Michael Bleaney
  • R. Smith

Abstract

Empirical evidence from the UK market is examined in the light of recent theories about closed-end fund discounts. Market pricing of skill, relative to the fees charged for it, accounts for a significant portion of discount variation, but cannot explain the rarity of index funds or why they trade at a discount, since fees tend to be lower than on open-end funds. Index funds have lower discount volatility, consistent with the skill hypothesis. The results imply that managerial skill, relative to the fees charged, does not wholly account for the tendency of closed-end funds to trade at a discount. Copyright Swiss Society for Financial Market Research 2010

Suggested Citation

  • Michael Bleaney & R. Smith, 2010. "Managerial skill and closed-end fund discounts," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 24(4), pages 441-451, December.
    • Handle: RePEc:kap:fmktpm:v:24:y:2010:i:4:p:441-451
    DOI: 10.1007/s11408-010-0144-8
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    References listed on IDEAS

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    1. Lee, Charles M C & Shleifer, Andrei & Thaler, Richard H, 1991. "Investor Sentiment and the Closed-End Fund Puzzle," Journal of Finance, American Finance Association, vol. 46(1), pages 75-109, March.
    2. Kim, Youngsoo & Lee, Bong Soo, 2007. "Limited participation and the closed-end fund discount," Journal of Banking & Finance, Elsevier, vol. 31(2), pages 381-399, February.
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    Cited by:

    1. Michael Bleaney & R. Todd Smith, 2013. "Excess volatility and closed‐end fund discounts," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 12(2), pages 165-179, May.
    2. Puspita Ghaniy Anggraini & Mahfud Sholihin, 2023. "What do we know about managerial ability? A systematic literature review," Management Review Quarterly, Springer, vol. 73(1), pages 1-30, February.

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    More about this item

    Keywords

    Closed-end fund; Fund management; Management fees; F30; G12;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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