Timid performance fees in mutual funds

Teresa Corzo Santamaría (), Carlos Martinez de Ibarreta and Juan Rodriguez Calvo
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Teresa Corzo Santamaría: Universidad Pontificia Comillas
Carlos Martinez de Ibarreta: Universidad Pontificia Comillas
Juan Rodriguez Calvo: Universidad Pontificia Comillas

Journal of Asset Management, 2018, vol. 19, issue 1, No 7, 64-77

Abstract: Abstract In this study, we empirically explore the implications of a non-standard mutual fund performance fee structure. This contract deviates from the designs recommended in previous literature, in that, it lacks a benchmark portfolio and fails to apply a high-performance fee component, making a timid attempt to align investors’ and managers’ interests. Using a panel data model, we compare the risk-adjusted performance measures for funds with and without performance fees, within the same investment policies. Some investment categories, that charge a performance fee component, earn superior risk-adjusted returns; additionally, they attract investors. The empirical implications of this study back up the prevailing theory.

Keywords: Mutual funds; Performance fees; Risk-adjusted returns; G20; G23; G11; C23 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1057/s41260-017-0061-8

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