Work

Institutional Investors and Mutual Fund Governance: Evidence from Retail–Institutional Fund Twins

Year: 2012

Type: article

Abstract: Advisors often manage multiple versions of a fund. These “twins” have the same manager and similar performance but are sold to different investors with differing abilities to select and monitor managers. Comparing investor flows in retail and institutional twins, we find that institutional investors are more sensitive to high fees and poor risk-adjusted performance. Consistent with the reduction of agency problems from greater monitoring, retail funds with an institutional twin outperform other retail funds by 1.5% per year. After the institutional twin is created, expenses decrease while measures of managerial effort at the retail fund increase.

Source: Review of Financial Studies

DOI: 10.1093/rfs/hhs105

Authors: Richard B. Evans, Rüdiger Fahlenbrach

Institutions: University of Virginia, École Polytechnique Fédérale de Lausanne, Swiss Finance Institute

Language: English

Topic: Financial Markets and Investment Strategies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W3121512739

FWCI: 9.915

Cites: 56

Cited by: 192

Related to: 10