Mutual Fund Bets on Market Power

Mutual fund competition and stock market liquidity

We study how competition in the mutual fund industry affects the stock market and its liquidity. We argue that mutual fund families operate as multi-product firms, jointly choosing fees, performance and number of funds. We show that competition between fund families distorts the incentives to collect information and induces the families to trade off performance and number of funds. An increase ...

Tests of Market Timing and Mutual Fund Performance

Market Discipline and Internal Governance in the Mutual Fund Industry∗

This paper develops a continuous-time model in which a portfolio manager is hired by a management company. Based on past portfolio returns, all agents update their beliefs about the manager’s skills. In response, investors can move capital into or out of the mutual fund, the portfolio manager can alter the risk of the portfolio and the management company can replace the manager. We examine the ...

Advertising and Market Structure in the US Mutual Fund Industry

This paper empirically investigates the impact of consumer characteristics on firms’advertising choice and resultant market structure by exploiting differences in investor clientele across various segments in the US mutual fund industry. I find that firms that sell directly to consumers exhibit a higher advertising elasticity of demand, higher advertising expenditures, and higher market concent...

The MUTUAL FUND INDUSTRY