Mutual Fund Governance: Depositary Independence and Investor Protection

Linh Dieu and Linh Tran Dieu ()
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Linh Tran Dieu: UCLy - UCLy (Lyon Catholic University)
Authors registered in the RePEc Author Service: Linh TRAN DIEU

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Abstract: The main role of a depositary is to protect investors by providing safekeeping and monitoring services. In Europe in general and in France in particular, it is common for funds and their depositary belong to the same financial group. This ownership linkage between funds and their depositary can affect the effectiveness of the depositary services, and investors might not be well protected. Using a sample of 1,515 French equity funds designed for retail investors, I investigate the effects of the dependence of depositaries on investor protection by comparing performance, risk taking and fees between independent and dependent-depositary funds. The results show that an independent depositary seems to approve more 'fair' fees than a dependent depositary. However, there is no significant difference in performance or in risk taking between these two types of funds. Nevertheless, retail investors seem to care about the independence of the depositary.

Keywords: mutual funds; independence of the depositary; governance (search for similar items in EconPapers)
Date: 2017-07
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Published in European Management Review, 2017, Volume15, Issue1 (1), https://onlinelibrary.wiley.com/doi/epdf/10.1111/emre.12126. ⟨10.1111/emre.12126⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01698557

DOI: 10.1111/emre.12126

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