Determinants and performance of outsourcing in the european mutual fund market

Jean-François Gajewski and Linh Tran Dieu

Journal of International Financial Markets, Institutions and Money, 2021, vol. 73, issue C

Abstract: Most studies on mutual fund outsourcing have focused on the U.S. market. The objective of our study is to investigate the determinants of the decision to outsource and the impact of outsourcing on fund performance in the European market. The European market differs from the U.S. one in terms of market structure. In the U.S., banks play a minor role while the situation in Europe is the opposite: Banks dominate the market, and independent companies play minor roles. This difference in market structure can impact both the decision to outsource and the relationship between outsourcing and fund performance. In the U.S., banks and insurance companies that do not specialize in portfolio management tend to outsource their portfolio management services to external management companies. In Europe, banking and insurance groups often have management companies integrated into their groups, allowing them to keep their portfolio management in-house. In terms of fund performance, in contrast to recent studies based on the U.S market, our results show that outsourced funds perform at least as well as in-housed funds. They are even more performing than in-house funds in the short term.

Keywords: Mutual fund outsourcing; European market; Outsourced funds; In-house funds (search for similar items in EconPapers)
JEL-codes: G00 G10 G11 G28 G30 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:73:y:2021:i:c:s1042443121000652

DOI: 10.1016/j.intfin.2021.101346

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