Risk management and team-managed mutual funds

Michaela Bär, Conrad S. Ciccotello and Stefan Ruenzi

Journal of Risk Management in Financial Institutions, 2010, vol. 4, issue 1, 57-73

Abstract: This paper relies on mutual fund industry data to examine the consequences of a specific risk-management policy. The focus is on the decision by a mutual fund sponsor to employ a fund management team instead of a solo manager. The analysis shows that team-managed funds tend to have (1) more reliable investment styles; (2) less tournament behaviour; and (3) more stable performance over time than solo-managed funds. While risk-adjusted net returns of team-managed funds are slightly lower than those of their solo-managed counterparts, team-managed funds attract significantly more new cash flows from investors. Thus, the paper provides empirical evidence that there is not necessarily a conflict between the objectives of risk management and value maximisation in financial institutions.

Keywords: conflicts of interest; risk management; teams; mutual funds; G01; G23; G29 (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:aza:rmfi00:y:2010:v:4:i:1:p:57-73

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