Article ID Journal Published Year Pages File Type
5091439 Journal of Banking & Finance 2006 22 Pages PDF
Abstract
A number of mutual funds cater exclusively to institutional investors. Although institutional funds might be a natural place to look for “smart money”, agency costs associated with delegated monitoring may lead to less monitoring and worse overall performance. We split institutional funds based on proxies for the degree of investor oversight, and we find that institutional funds with low initial investment requirements and funds with retail mates perform significantly worse than other institutional funds both before and after adjusting for risk and expenses. Tracking error is especially important in the flow-performance relationship of institutional funds with high minimum investment requirements.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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