Fund Flows and Income Risk of Fund Managers

Xiao Cen, Winston Dou, Leonid Kogan and Wei Wu

No 31986, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop a unique dataset, the first-ever of its kind, by leveraging the US Census Bureau’s LEHD program and various big textual data sources, to examine the factors influencing the compensation and career trajectories of US active equity mutual fund managers. We find that managers’ compensation is primarily determined by assets under management (AUM), with return performance directly influencing bonuses beyond its impact on AUM. Despite not aligning with client interests, fund flows significantly affect manager compensation and career outcomes. Large fund outflows increase a manager’s likelihood of job turnover (with a substantial decline in compensation) by 4 percentage points.

JEL-codes: G11 G23 J24 J31 J33 J44 J63 (search for similar items in EconPapers)
Date: 2023-12
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