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Mutual fund sponsors differ in their transparencies (public or private), ownerships (mutual or stock), distribution/servicing channels, affiliations, brand reputational values, manager abilities and access to information. We find that performance differences among Canadian fixed-income funds differentiated by sponsor and fund types are mainly driven by cost minimization and to a less extent by managerial abilities. Funds sponsored by Banks exhibit lower fees and superior return performances, on average, over those sponsored by Insurers, Financial cooperatives, and Independents even after controlling for various fund and sponsor characteristics. Higher benchmark-adjusted returns for bank-sponsored funds are consistent with their lower fees and informational advantages, mainly due to their nation-wide, lower-cost distribution/service channels, and their affiliate activities.

Purpose To analyze the recent SEC no-action relief allowing a non-US investment company to invest as a feeder fund in a US registered open-end management investment company without complying with all of the conditions of Section 12(d)(1)(E) of the Investment Company Act of 1940. Design/methodology/approach This article discusses the various conditions that a non-US investment company investing as a foreign feeder in a US registered open-end management investment company must satisfy in order to avoid complying with certain provisions of Section 12(d)(1)(E) of the Investment Company Act of 1940. In addition, the article analyzes certain potential tax and regulatory challenges facing firms seeking to rely on the relief. Findings This article concludes that the SEC no-action relief is an incremental step in reducing barriers to global distribution of US registered funds and may marginally increase the use of cross-border master-feeder arrangements as contemplated by the no-action letter. Nevertheless, this article cautions that significant impediments to global distribution of US registered funds remain, including tax withholding and non-US law issues. Originality/value This article contains valuable information about the regulatory impediments to global distribution of US registered funds, as well as learned assessments of the impact of recent developments in this space by experienced securities lawyers.

PurposeThe purpose of this paper is to examine the determinants of fund expense ratio for Malaysia-based international equity funds. An understanding of what these factors are and how they affect a fund’s expense ratio is important given that international funds can be expensive to operate and that fund expenses have negative impact on investors’ returns.Design/methodology/approachThis study employs a standard cross-sectional regression model in examining the factors that influence fund expense ratio of international equity funds.FindingsThe findings show that sales charge is positively related to fund expense ratio although it is not included in the expense ratio computation. This suggests that investor could possibly incur additional “hidden cost” since sales charge represents an upfront cost that an investor has already paid at the time of the fund sale. Additionally, funds with aggressive investment objective and frequent portfolio turnover show higher expense ratios than funds with conservative investment objective and less trading activities. There is no evidence that fund size, fund age, and the number of funds in a fund family are significantly related to the fund expense ratio. While the lack of statistical finding for fund size in this study seems inconsistent with the results of the US market in general, the finding is supportive of the Thai equity fund market and thus implying that finding could be country specific.Research limitations/implicationsThere is limited availability of international equity funds in Malaysia.Practical implicationsThe findings provide useful insights for investors to make informed international fund selection decisions. Expense-conscious investors should pay particular attention to fund’s sales charge, turnover ratio, and its investment objective when selecting funds for investment.Originality/valueThis paper provides first evidence on the determinants of fund expense ratio of Malaysia-based international equity funds.

© 2017 Elsevier B.V. General partners (GPs) in private equity (PE) report the performance of an existing fund while raising capital for a follow-on fund. Interim performance has large effects on fundraising outcomes. The impact is greatest when backed by exits and for low reputation GPs. Faced with these incentives, GPs time their fundraising to coincide with periods of peak performance through two strategies: (1) exit and fundraise and (2) net asset value (NAV) management. Consistent with the former, performance peaks are greatest for funds with high realization rates. Consistent with the latter, low reputation GPs with low realization rates experience performance peaks and erosions in performance after fundraising.

The investors of mutual funds can reduce their selection risk by selecting the mutual funds based on certain criteria. One such criterion could be the educational credentials of fund managers. The present study has examined whether performance of mutual funds could be attributed to differentials in educational credentials of fund managers and thereby can provide necessary signals to investors. The study has compared performance and investment strategy of fund managers having management degree from premier management institutions with others having CA/CFA/ICMA qualification. The results show that the performance between these two groups of fund managers does not differ significantly. However, the difference in performance became significant after controlling for various fund characteristics, such as size, expense ratio, liquidity ratio and flow of funds. This suggests that the relation between fund performance and educational credentials may be moderated by control variables. The results showed that the fund managers with a premier management degree were performing better than the other group and that they also followed a more extreme investment strategy. Further, the study has examined whether the relation between educational credentials of fund managers and performance and investment strategy has been impacted by different time periods of economic cycle. The examination in different sub-periods of economic cycle provided better performance of fund managers with premier management education, particularly during crisis period of economy. This performance differential due to educational credentials during the crisis period have been independent of the investment strategy of fund managers.

This study aims to investigate the persistence of timing and stock picking ability of ?winner fund managers? instead of winner funds. The sample of this study is the previous and next equity funds which the same fund managers manage in Taiwan. we measure the ranking of timing and stock picking ability of fund managers for the period they manage the specific fund. The result shows that for the whole fund managers, the successive two funds they manage are performance persistent. Moreover, the stock picking ability of the two funds they manage is persistent no matter the two funds belonging to the same fund company or not. Regarding the winner fund manager, we find no persistence of return, timing ability and stock picking ability. No matter the winner fund managers change the jobs to the other fund companies or not, the next funds the winner fund managers manage are not timing and stock picking ability persistent. The result of logistic regression demonstrates that the probability of becoming timing or stock picking winners of the next funds which the timing or stock picking winner managers manage is not significantly higher than other funds. The result indicates that investors do not necessarily follow the timing and stock picking winner fund managers. The performance of the next funds which the winner fund managers manage may reverse especially for the successive two funds belonging to the same fund company. Little literature investigates the issue regarding the fund timing and stock picking performance from the viewpoint of ?fund managers?. The results of this study provide investing implications for fund investors when they are choosing funds.

Recent reform proposals call for an elimination of the constant net asset value (NAV) or “buck” in money market mutual funds to reduce the occurrence of runs. Outside the United States, there are several countries that have money market mutual funds with and without constant NAVs. Using daily data on individual fund flows from these countries, this paper evaluates whether the reliance on a constant NAV is associated with higher fund redemptions. The data suggest that funds with a constant NAV experienced more negative net flows during the period of the run on the Reserve Primary Fund, even after controlling for measures of fund risk and risk aversion. However, I do not find convincing support for the hypothesis that the effect of sponsor strength on fund flows was stronger for constant NAV money market funds.

The core idea of life-cycle funds or target-date funds is to decrease the fund's equity exposure and conversely increase its bond exposure towards the fund's target date. Such funds have been gaining significant market share and were recently set as default choice of asset allocation in numerous defined contribution schemes or related old-age provision products in several countries. Hence, an assessment of life-cycle funds’ risk-return profiles – that is, the probability distribution of returns – is essential for sustainable financial planning of a large group of investors. This paper studies the risk-return profile of life-cycle funds in particular compared to simple balanced or lifestyle funds that apply a constant equity portion throughout the fund's term instead. In a Black–Scholes model, we derive balanced funds that reproduce the risk-return profile of an arbitrary life-cycle fund for single and regular contributions. We then analyze the accuracy of our results under more complex asset models with s...

The investment fund governance frameworks of the U.S., the largest fund domicile globally, and Luxembourg, the second-largest domicile, differ significantly. U.S. funds have mandatory independent directors and these directors are empowered to be the watchdogs of the fund investors, negotiating fees with the fund management company on their behalf. This is not the case for Luxembourg funds, established in accordance with the E.U. UCITS Directive. This study uses a sample of Luxembourg UCITS funds and shows that, although there is no regulatory requirement, approximately half of the sample funds have appointed at least one independent board member. Among Anglo-Saxon fund promoters of these Luxembourg funds, the level of independence is higher than among continental European promoters and has increased in the past decade. In that same period, continental European promoters have decreased the level of independence of their funds boards. A survey among board members of the sample funds showed that, in absence of the requirement to negotiate fees with the fund management company, Luxembourg boards give relatively low priority to costs, which they see as an area that is primarily the prerogative of the promoter. That this is irrespective of whether the board has independent board members, is consistent with earlier quantitative research, that did not provide consistent evidence that funds with more independent boards have lower costs. "Keywords: "" Investment funds; European Union; Governance; Board of directors; Board independence;Fund costs."""

It is well known that the equity structure of listed companies have effects on the company performances to some extent. However, the fund company is one special kind of financial enterprise and the relationship between its unique equity structure and fund performance still remains in suspense. On the basis of theoretical conjectures and results of predecessors, the development history of equity structure of Chinese fund company is analyzed and the fund evaluation methods are discussed in this paper which is based on the risk adjustment of excess return. Through sieving and accounting data, we conducted an empirical study about the effects of equity structure and regional feature on fund performance. The conclusions can be drew as that the fund company with foreign capital shows no signs of highlights and we found that concentrated shareholding and national resources are beneficial to improving fund performance level. In addition, the operating time and the fund company's location, investment fund's average tenure also have influences on fund performance.

I measure the value that investors place on trust and relationships in asset management by examining mutual fund flows around announced changes in the ownership of fund management companies. I find a decline in flows of around 7% of fund assets in the year following the announcement date, starting after announcement and accelerating after the closing date of the ownership change. A decomposition into inflows and outflows shows that the overall decrease in flows is entirely driven by increasing outflows with no change in inflows. Retail investors and investors in funds with higher expense ratios are most responsive to ownership changes, providing new evidence that such investors place a significant value on trust and are more likely to respond to a relationship disruption by withdrawing their assets. Alternative explanations such as changes in distribution network, reactions to expected fund closure, expected or past manager changes, or poor expected returns do not seem to explain the results.

Purpose – The purpose of this paper is to compare the fund flow – performance relationship for Islamic and conventional equity funds in Malaysia. Design/methodology/approach – The authors use panel regression models to estimate the relationship between fund flows and performance for Islamic and conventional equity funds in Malaysia from 2001 to 2009. The data for each fund include fund flows, assets under management, management expenses, fund age, portfolio turnover, fund risk and return and the number of funds in the fund’s family. The authors also include market returns and year effects. The sample consists of 127 Malaysian equity funds with at least 65 per cent domestic equity holdings comprising 35 Islamic and 92 conventional equity funds. Findings – Islamic fund investors respond to performance in much the same way as conventional fund investors, increasing fund flows to better performing funds and decreasing fund flows to poorer performing funds. However, there is also evidence that Islamic fund investors are relatively less responsive toward poorly performing Islamic funds, suggesting an asymmetry in the expected positive fund flow – performance relationship, but only for Islamic fund investors. When choosing funds based on other fund attributes, Islamic fund investors again exhibit similar behaviour, and like conventional fund investors direct larger percentage fund flows into smaller funds as well as funds with larger past fund flows and higher expense ratios. Research limitations/implications – The authors were only able to access data on annual net fund flows not quarterly or monthly fund inflows and outflows as usual in developed markets and this may obscure some important aspects of investor decision-making. There is also insufficient data for matched-sample techniques, which may better control for fund-specific characteristics. Practical implications – Islamic funds like conventional funds will experience increased fund flows with better performance and vice versa. However, Islamic fund investors appear somewhat less likely to remove monies from poorly performing funds. The authors believe this is because investors either place a premium on the non-return attributes of Shariah-compliant funds and/or wish to avoid search costs in finding another suitable Islamic fund. Apart from this, Islamic and conventional fund investors behave in a similar manner, and the authors believe that this is possible in Malaysia given the size and diversity of its Islamic fund sector. Originality/value – This paper is one of the very few empirical studies concerning the behaviour of Islamic investors, particularly in Malaysia, primarily because of limitations in data availability.

Using fund-, firm- and bank-level data, we investigate the investments of the Italian private equity (PE) funds, with a focus on the north-western regions of Italy, where both the PE fund managers and their investments are heavily concentrated. The average size of the portfolios is small by international standards, and their concentration by firm has been growing after the 2008 crisis. The average duration of investments is rather short (about 3.7 years), and less than 10 % of them target firms that are both young and innovative. PE investments by Italian fund managers are still underdeveloped, relative to traditional bank credit. We find that being participated by a PE fund increases the amount of credit obtained by the target firm and the number of bank relationships, whereas it leaves the cost of credit unaffected. The effect of the PE fund participation is exclusively related to the entry of the fund in the firm’s capital, as it fades away as soon as the fund exits from the capital, thus suggesting a weak signalling role of PE towards banks.

This paper discusses and analyzes asset allocation and performance of the major pension funds in four East Asia countries, namely Malaysia, Singapore, Hong Kong and South Korea. The respective funds for these countries are Employee Provident Fund (EPF), Central Provident Fund (CPF), Mandatory Pension Fund (MPF) and National Pension Service (NPS). The impact of some economic crises on the fund performance will also be assessed. Besides looking at the individual countries, a comparison of the performance among all the funds will also be done. From the analyses, it is found that the CPF is the most conservative pension fund as it invested most of its funds in fixed income and the investments were made in the local markets, while MPF is the most aggressive pension fund as most of its funds were invested in equities. Performance of the funds was measured in terms of return on investment (ROI). All funds recorded the lowest ROI during the subprime crisis in 2008. Besides the subprime crisis, these funds were also affected by the Japanese earthquake as lower ROI were also observed in 2011.

This paper extends the current literatures on the relation between fund expenses and fund flows using data from Taiwan. Our findings for the Taiwan market differ from previous studies on the U.S. market. Specifically, we find no support for the notion of “out of sight, out of mind”. For Taiwan mutual funds, net flows and inflows are negatively related to operating expenses but not front-end loads. The discrepancy between our results and those reported for the U.S. market may be attributed to the fee structure in Taiwan, where operating expenses are much higher than front-end loads and seem to have a bigger impact on fund performance. The negative relation between net flows (inflows) and operating expenses is more pronounced for funds with high institutional investor participation and funds charging high operating expenses. However, investor types show no significant impact on the relations between front-end loads and various measures of fund flows.

The purpose of this research is focused on equity mutual fund in Indonesia at 2007-2013. From equity mutual fund that active at 2007-2013 this research examined whether selected factors influence the performance of equity mutual fund. Then this research also investigated which equity mutual fund's performance exceeded performance of Indonesia stock index (IHSG). 5 equity mutual funds that exceed Indonesia stock index (IHSG) is panin dana maksima, schroder dana istimewa, pratama saham, batavia dana saham, dan BNP Paribas pesona. This research can provide recommendation for small and medium enterprise to allocate their fund in mutual fund. SMEs usually have a volatile revenue and income stream. In order to reduce the operational risk, SMEs allocates high cash position as a buffer during difficult situation. This paper aims to increase earning from this cash position through investment strategy.

Using a unique database of UK fund manager changes over the period from 1997 to 2011, we examine the impact of such changes on fund performance. We find clear evidence to suggest that a manager change does affect the benchmark-adjusted performance of UK mutual funds. In particular we find a significant deterioration in the benchmark-adjusted returns of funds that were top performers before the manager exit and, conversely, a significant improvement in the average benchmark-adjusted returns of funds that were poor performers before the manager exit. Our use of the Carhart's (1997) four-factor model reveals that the improvement in average post manager exit performance is accompanied by a reduction in market risk, a slight reduction in exposure to small cap stocks, and an increase in exposure to value and momentum stocks. Overall, our results suggest that UK fund management companies have been relatively successful in replacing bad managers with better managers, but relatively unsuccessful at finding equivalent replacements for their top performing managers. We believe that regulators should therefore try to ensure that all efforts are made by fund management companies to inform all of their investors about a change in management.

Unlike the corporate funds in the US, mutual funds in many countries such as China and Germany operate under a different governance arrangement and are thus called “contractual funds.” The governance structure of contractual funds allows shareholders of fund management companies, rather than the fund investors, to be responsible for asset management decisions. Therefore, a fund’s governance attributes may be especially important in driving its performance. Using a comprehensive governance data covering Chinese mutual funds, this paper finds that the governance and organizational structures of Chinese fund management companies significantly influence the performance of their affiliated funds. In particular, while a larger stake from the top1 shareholder significantly improves the performance of affiliated funds, the presence of multiple largest shareholders reduces their performance. Moreover, fund management companies that offer fewer fund products and charge higher management fees tend to perform better. Finally, more institutional holding in a fund appears to function as an external supervisory surrogate for internal board governance to help improve fund performance.

This paper examines the relationship between board holdings, compensation and the turnover of underperforming mutual fund managers. Previous studies find that some fund managers consistently underperform their peers over long periods of time. The presence of these consistent underperforming funds might be partially explained by ineffective monitoring whereby board interests are not aligned with those of shareholders. Based on 2003 data collected from 606 mutual funds, our results provide evidence that underperforming fund managers have a lower probability of being replaced when their boards have lower holdings and higher compensation.

The importance of managed fund governance structures has become apparent in recent years. Looking at the Australian not-for-profit pension funds, we find correlations between funds’ internal governance structures and their level of costs. Larger boards are linked to higher investment management fees and expenses, operating expenses and trustee and audit fees. We also find a positive relation between the proportion of independent trustees and investment management fees and expenses and operating expenses. These fund costs increase as the number of board committees and fund size increase. Finally, we observe that the presence of board committees affects different types of fund costs. Overall, these findings suggest that the conventional good governance practices do not benefit superannuation fund members in terms of cost reduction. We find no evidence of economies of scale in cost minimisation, since the relation between fund size and costs is mixed across various governance variables.

This paper analyzes whether portfolio pumping by fund managers is widespread in the Korean equity fund market, and identifies the factors encouraging this behavior. The study results demonstrate that (i) fund managers are tempted to distort fund performance through portfolio pumping at year-end (when their achievement is evaluated); (ii) this manipulation occurs more actively in small funds and those with good past performance; (iii) portfolio pumping is observed more in products of foreign or small-sized asset management companies; and (iv) although statistically less significant, fund managers are tempted to undertake price manipulation when their holdings have low liquidity.

We study the behavior of a mutual fund manager in a discrete-time model, in which new investors may choose to invest in the fund after the fund manager has made trading decisions. We show that under certain conditions the fund manager may choose to buy overvalued assets at the expense of the investors in order to attract new investments, who would otherwise not invest in the fund. This can potentially lead to higher risky asset prices and a higher-than-optimal proportion of investment in risky assets in the active fund management industry.

We use a sequential game to analyze an agency problem in the mutual fund industry where a representative fund manager considers window-dressing his portfolio holdings for the purpose of attracting fund flows from a representative investor. The manager is motivated to window-dress to improve the investor's perception of managerial skill which may positively affect fund flows in the next period. However, the investor may suspect window-dressing and thus downgrade perceived managerial skill. The model supports a Bayesian Nash equilibrium where the manager window-dresses only when receiving a low return in the first period and the investor withdraws funds only when observing low returns in both periods. Consequently, we show that window-dressing is a rational behavior even when fund outflows may result.

Real estate mutual funds have grown dramatically in number, size, scope and assets under management over the last 15 years, but little assessment is evident. The present study addresses this limitation. Better prior period performance is associated with greater shares of fund inflows for a period. Returns, however, are negatively associated with increased fund flows and fund size. Investors chase past performance limiting fund managers’ ability to optimize investments. Under normal market conditions, but departing from typical mutual fund performance, real estate mutual fund returns generally exceed relevant benchmarks on a before expenses basis and match benchmark returns after expenses. The ability to meet and exceed benchmark returns, however, does not hold during the financial crisis period. Overall, more established funds are shown to have higher returns while fund turnover is not a determinant of returns.

This paper provides a theoretical model on the determination of fund expenses, focusing on vertical structures of the fund industry and customer switching costs. We also empirically test our theoretical findings using data from the Korean fund market. Our first theoretical finding is that a distribution channel that is integrated with an asset management company has an incentive to charge higher distribution fees than an independent channel: a vertically integrated distribution channel tends to raise the costs of rival asset management companies. Our second finding is that the equilibrium is asymmetric in certain circumstances: a channel may want to remain independent, whereas the other wants to be vertically integrated with an asset management company. Our empirical analysis showed evidence supporting the first theoretical prediction.

In a market crowded with many small funds, a fund manager is likely to manage more than one fund. We hypothesize and confirm that, in this situation, fund managers tend to neglect very small funds by simply holding cash rather than investing because of their limited time and efforts. By examining the Korean fund market, where one fund manager simultaneously manages about ten funds on average, we find that the cash holding ratio monotonically decreases with fund size. While small funds perform worse than large funds in appearance, the negative relationship between size and performance disappears after being controlled for the cash holding ratio.

I document portfolio pumping at the fund family level, a strategy that non-star fund managers buy stocks held by star funds in the family to inflate their performance at the quarter end. Families that heavily employ the strategy show strong evidence of inflated performance after 2002, when the SEC increased regulation on portfolio pumping at the fund level. Non-star fund managers pumping for star funds in the family receive 1.8% ($24 million) more inflows per quarter, conditional on the performance. Furthermore, pumping is concentrated in stocks that are buried deep down in the holdings of star funds.

We study the behavior of pension plan investors in Turkey regarding fund allocation and withdrawal with respect to return, risk and management fee. We find that investors avoid risk and there is a convex and positive relationship between risk-adjusted return and fund flows. Investors display disposition effect regarding nominal monthly return. Cost is a factor only for equity/foreign/gold funds group and present before the introduction of government contribution plan. Large funds experience net fund inflow while old funds experience net fund outflow indicating market competition force managements to reach to a certain size within a period. Plans offset fund outflow if they could keep investors with large portfolios.

Indian Mutual Funds are playing a very crucial developmental role in allocating resources in the emerging market economy. Mutual funds act as a financial intermediary in fund mobilization and investment. The essence of a Mutual Fund is the diversified portfolio of investment which diversifies and reduces the risk by spreading out the investor's money across available or different types of investments. This study analyzes the behaviour of few selected Mutual Fund Schemes during the period of December 2008 to December 2012 in comparison to Sensex Return. I have also analysed the managerial efficiency in stock selection through Alpha, Beta and RSQ and their variability for each of these mutual funds in this period. It is generally believed that mutual funds are less volatile as the managers use their expertise in selecting the appropriate stocks for the mutual fund portfolio. The data is analyzed using Pearson's Product Moment Correlation Method, the coefficient of variation of the return generated by the Sensex and the Mutual Fund Schemes to determine a more stable series and ANOVA for the variation in Alpha, Beta and RSQ of the funds. It was found that in the given study period the variability in the return of the Mutual Fund Schemes are between moderate to high and thus these Mutual Fund Schemes may not be as stable as they seem to be and the fund managers were not so efficient in selecting stocks for all the funds. The investors should weigh their options carefully before deciding to invest in a Mutual Fund.

The essence of a Mutual Fund is the portfolio of investment, which diversifies and reduces the risk by spreading out the investor's money across available different types of investments. Through our study we have analyzed how few selected Mutual Fund Schemes behave during the period of December 2008 to December 2012, i.e. during the global meltdown and the period thereafter. We have analyzed the coefficient of variation of the return generated by the Sensex, Company Scrips and the Mutual Fund Schemes to determine a more stable series, the Managerial Efficiency of the selected Mutual Fund Schemes in stock selection, the Sharpe ratio and the pattern of return generated by the selected Mutual Fund Schemes before 2008 and after 2008.We found that the variability in the return of the Mutual Fund Schemes are between moderate to high and thus these Mutual Fund Schemes may not be as stable as they seem to be. The investors should weigh their options carefully before deciding to invest in a Mutual Fund Scheme. I. Background Of The Study Indian Mutual Funds are playing a very crucial developmental role in allocating resources in the emerging market economy by mobilizing savings by issuing units and channelling funds in the capital market into productive investment. According to the Association of Indian Mutual Fund Industry, "A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by the unit holders in the proportion to the number of units owned by them. Thus a mutual fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified professionally managed basket of securities at a relatively low cost." The first Mutual Fund scheme was launched in India by UTI in 1964 and since then the industry has seen a lot of growth in terms of new Mutual Fund schemes and their returns. In March 1965 the AUM was INR 25 crore. As on 31

This paper studies the flows of funds into and out of equity mutual funds. Consumers base their fund purchase decisions on prior performance information, but do so asymmetrically, investing disproportionately more in funds that performed very well the prior period. Search costs seem to be an important determinant of fund flows. High performance appears to be most salient for funds that exert higher marketing effort, as measured by higher fees. Flows are directly related to the size of the fund's complex as well as the current media attention received by the fund, which lower consumers' search costs.

I examine the role of convenience in the mutual fund industry. I find that investors pay more for relatively convenient funds, and that the flows to convenient funds are less responsive to performance. These findings suggest that investors do not evaluate mutual funds independently, but rather that investors select a primary fund, likely based on beliefs about managerial ability, and then select funds which are relatively convenient to this primary fund.

This study investigates whether the relation between aggregate fund flow and market returns differs between retail and institutional funds. For the retail fund sample, we document a contemporaneous relation between flow and market returns and also find evidence of feedback trading. In contrast, there is little evidence of a relation between flow and market returns for the institutional fund sample. Consequently, it appears that retail and institutional fund investors use different investment strategies, with retail investors following a more naive strategy. We find no evidence of flow inducing price pressure for either type of fund.

There has been a sustained resurgence of subscription loan or capital call lending facilities to private equity funds. Typically, the loans to a private equity fund are secured by a pledge by the fund (and, if applicable, the fund’s general partner) of the unfunded capital commitments of the fund’s investors and the rights and remedies of the fund in respect thereof. Because the collateral securing these loan facilities arises from the constituent documents of the fund, as well as the subscription agreements executed by the fund’s investors, the establishment and structuring of a subscription loan facility requires a comprehensive legal due diligence review of the related fund’s underlying documents, including its constituent documents, investment management agreement, offering materials, subscription agreements, and any relevant investor-side letters. It is essential that these documents explicitly permit borrowing facilities and the ability to pledge the unfunded capital commitments of the fund’s investors and the other collateral and expressly provide that the investors commit to fund capital calls. There are also less obvious, but no less important, fund document provisions that can significantly impact a lender’s rights and remedies, including provisions relating to alternative investment vehicles, the right of an investor to be excused from funding a capital call under certain circumstances, the ability of the fund to reduce unfunded capital commitments of investors by deeming the payment of certain expenditures to be capital contributions by the investors, and restrictions set forth in side letters with fund investors. Certain of the issues raised by the terms of the constituent documents for a fund can be addressed or mitigated in the loan documents, however, certain other issues cannot be easily addressed therein. As a result, it is critical to identify potential issues prior to the time that a fund’s constituent documents are finalized. The complexity of the underlying fund documents and the relative importance of the provisions therein make due diligence essential in the context of establishing these facilities, as the devil is in the details.

We develop a model of trading by an informed fund manager compensated on the basis of her fund's Net Asset Value (NAV) and show that she has an incentive to pump her portfolio by buying securities already held by her fund. Such portfolio pumping leads to excessive trading and diminished long-term fund performance. Portfolio pumping also introduces an upward bias in measured NAVs and contributes to the closed-end fund discount. Despite such costs, it may be optimal to base fund manager compensation on NAV in order to incentivize her to trade more aggressively.

Using a unique dataset, we document that only those closed funds for which no new fund is subsequently launched continuously deliver positive abnormal returns. This suggests the existence of an optimal fund scale. In spite of the potential diseconomies of scale, a non-trivial proportion of closed funds have new funds cloned—the scale motive would not be a complete explanation for the closure. When managers of closed funds clone new funds, they receive greater public attention and thus can attract more fund flows and charge higher fees. Furthermore, better-performing closed fund managers attract more fund flows to their new siblings, making the closure an effective mechanism to extract economic rents. Overall, we find that closing and cloning is an attractive strategy for funds seeking to increase their management fees and funds with more managers in place. Aspects of the closed fund family also affect the launch decision of new siblings.

Sovereign wealth funds exist in Russia for eight years. The Stabilization Fund was established in 2004 and later divided into the Reserve Fund and the National Wealth Fund. During this period the funds assets and functions changed significantly. The paper compares the actual uses of the funds with the stated goals of their creation. We conclude that the original stabilization function was successfully implemented both by the Stabilization Fund and the Reserve Fund though the mechanism of fiscal stabilization was broadened in both cases. The National Wealth Fund, however, did not accumulate long-term savings to support the pension system as was originally intended.