Tournaments in Mutual Fund Families

Alexander Kempf and Stefan Ruenzi
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Alexander Kempf: University of Cologne - Department of Finance

Finance from University Library of Munich, Germany

Abstract: In this paper we examine intra-firm competition in the mutual fund industry. Our empirical study of the US mutual fund industry shows for the first time that managers within mutual fund families compete against each other. They adjust the risk they take depending on the relative position within their fund family. In particular, we show that the direction of the adjustment crucially hinges on the competitive situation within a family. This behavior is in accordance with predictions derived from theoretical models. Our results have serious implications for investors, fund management companies and regulatory authorities.

Keywords: Mutual Funds; Risk-Taking; Rank-Order Tournaments; Rank-of- Ranks Tournament; Family Tournament; Intra-Firm Competition (search for similar items in EconPapers)
JEL-codes: G (search for similar items in EconPapers)
Pages: 38 pages
Date: 2004-04-22
New Economics Papers: this item is included in nep-com and nep-fin
Note: Type of Document - pdf; pages: 38. 38 pages, pdf, prepared from pdftex
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Tournaments in Mutual-Fund Families (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpfi:0404011

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