More competition in delegated portfolio management: A win-win situation? An experimental analysis

Tatiana Balmus, Juergen Huber and Matteo Ploner

Journal of Economic Behavior & Organization, 2020, vol. 178, issue C, 777-800

Abstract: We investigate how competition between fund managers and disclosure of other managers’ fees and performance influence fees, risk taken, earnings, and investor concentration, with a controlled lab experiment. We find that more competition and disclosure lead to a reduction in fees: The relative decrease is larger for management fees than for performance fees. Although, the decrease in fees does not affect managers’ investment strategies, it increases investors’ readiness to entrust their funds to a manager. This leads to higher overall earnings, with the benefits going to investors and to fund managers able to attract more or new investors. The empirical literature provides a mixed picture of the consequences of competition in delegated portfolio management, but our results suggest that more competition is mostly beneficial for the development of capital markets.

Keywords: Performance and management fees; Competition; Transparency (search for similar items in EconPapers)
JEL-codes: D14 D18 G11 G41 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:178:y:2020:i:c:p:777-800

DOI: 10.1016/j.jebo.2020.08.017

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