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2015 Conference

October 15–16, 2015

Orlando, FL

Welcome to the AFS Conference 2015 Schedule App. Please use the search features to see when your session or poster has been scheduled to take place. 

Playing Favorites: Conflicts of Interest in Mutual Fund Management

Friday, October 16, 2015 at 9:00 AM–10:30 AM EDT
3-Senate
Keywords: 5 words maximum

mutual fund managers, side-by-side management, conflicts of interest, underperformance

Very short description for use in the program to help attendees understand more than a title can describe

Using a new dataset hand collected from SEC regulatory filings, we compare the performance of funds with managers who receive performance-based fees in other accounts to funds without these side-by-side arrangements. We find that the side-by-side funds underperform other funds by 52.8 bps per year in Carhart alpha. The negative impact of side-by-side management is stronger in single-manager funds than in team-managed funds. Our evidence provides support for the conflicts of interest hypothesis, which suggests that the high-powered incentive fees in outside accounts (e.g., hedge funds) lead mutual fund managers to strategically shift returns from mutual funds to other accounts.

Lead & Corresponding Author

Diane Del Guercio, PhD, University of Oregon
Job Title

Professor of Finance

Additional Authors

Egemen Genc, PhD, Rotterdam School of Management, Erasmus University
Job Title

Assistant Professor of Finance

Hai Tran, University of Oregon
Job Title

Finance PhD student

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