Good Stewards, Cheap Talkers, or Family Men? The Impact of Mutual Fund Closures on Fund Managers, Flows, Fees, and Performance

Arturo Bris, Huseyin Gulen, Padma Kadiyala and P. Raghavendra Rau

The Review of Financial Studies, 2007, vol. 20, issue 3, 953-982

Abstract: We examine a sample of 125 equity mutual funds that closed to new investment between 1993 and 2004. We find that funds close following a period of superior performance and abnormal fund inflows. Fund managers raise their fees when they close to compensate managers for losses in income due to the restrictions in size imposed by the fund closure decision. Managers reopen when fund size declines. However, they do not earn superior returns after reopening, suggesting that the fund closure decision does not provide information about superior fund managers.

JEL-codes: G14 G23 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (24)

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