Investment performance and market share: A study of the German mutual fund industry

Jan Krahnen (), Frank A. Schmid and Erik Theissen

No 06-06, CFR Working Papers from University of Cologne, Centre for Financial Research (CFR)

Abstract: We study a set of German open-end mutual funds for a time period during which this industry emerged from its infancy. In those years, the distribution channel for mutual funds was dominated by the brick-and-mortar retail networks of the large universal banks. Using monthly observations from 12/1986 through 12/1998, we investigate if cross-sectional return differences across mutual funds affect their market shares. Although such a causal relation has been established in highly competitive markets, such as the United States, the rigid distribution system in place in Germany at the time may have caused retail performance and investment performance to uncouple. In fact, although we observe stark differences in investment performance across mutual funds (and over time), we find no evidence that cross-sectional performance differences affect the market shares of these funds.

Keywords: Mutual funds; abnormal returns; market shares; distribution channel (search for similar items in EconPapers)
JEL-codes: G23 (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfrwps:0606

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