scholarly journals You Learn When It Hurts: Evidence in the Mutual Fund Industry

2022 ◽  
Vol 15 (1) ◽  
pp. 33
Author(s):  
Ruth Gimeno ◽  
José Luis Sarto ◽  
Luis Vicente
Keyword(s):  
Learning Process ◽  
Mutual Fund ◽  
Generalized Method Of Moments ◽  
Global Learning ◽  
Negative Consequences ◽  
Fund Managers ◽  
Fund Families ◽  
Fund Industry ◽  
Mutual Fund Industry ◽  
Financial Groups

This paper aims to contribute to the lack of research on the learning process of mutual fund markets. The empirical design is focused on the ability of the Spanish equity mutual fund industry to learn from its important errors. The choice of this industry is justified by both its relevance in the European mutual fund markets and some specific characteristics, such as the concentration and the banking control of the industry, which may affect the learning process. Our main objectives are to identify important trading errors in mutual fund management by applying three independent filters based on the relative importance of each decision, and then testing the evolution of these errors both at the industry level and at the fund family level. We apply the dynamic model of generalized method of moments (GMM), and we find an overall significant decrease in the percentage of important trading errors over time, thereby providing evidence of the global learning process of the industry. In addition, we find that a large number of fund families drive this evidence. Finally, we obtain that the family size and its dependence on financial groups do not seem to play significant roles in explaining the learning process. Therefore, we conclude that fund managers have incentives to learn from their important trading errors, in order to avoid them in future decisions, due to their serious negative consequences on fund performance, regardless of the characteristics of the families to which they belong.

A Window into Thai Mutual Fund Managers’ Perception and Decision-Making Process

2017 ◽  
Vol 20 (03) ◽  
pp. 1750020 ◽  
Author(s):  
Anchada Charoenrook ◽  
Pantisa Pavabutr
Keyword(s):  
Interest Rates ◽  
Mutual Fund ◽  
Optimal Allocation ◽  
Fixed Income ◽  
Fund Managers ◽  
Country Level ◽  
Brand Reputation ◽  
Equity Mutual Funds ◽  
Fund Industry ◽  
Mutual Fund Industry

This paper identifies key features of the Thai mutual fund industry and analyzes determinants of those characteristics using unique survey data from 45% of fund managers registered in Thailand in 2012. The Thai mutual fund industry has some unique characteristics. It has experienced rapid growth and is dominated by bank-related funds that are mostly fixed income funds. Equity allocation of the fund industry and our sample funds are below optimal allocation benchmarks. However, country-level allocation is close to optimal, suggesting that Thai investors who invest in equity prefer to do so directly rather than through equity mutual funds. Fund managers perceive that too much regulation, investors’ preference for deposits and insufficient liquidity limit growth in their equity investments. Managers in our survey indicate that investors do not consider expense ratio and management fee important in determining mutual fund investments. This is contrary to general investment recommendations. Thai bank-related fund managers believe that investors place more importance to brand reputation than performance, whereas foreign fund managers view performance as more important. Thai bank fund managers are more concerned about local interest rates than Thai non-bank and foreign fund managers.

scholarly journals Motives for Mergers and Takeovers in the Indian Mutual Fund Industry

2012 ◽  
Vol 37 (2) ◽  
pp. 33-42 ◽  
Author(s):  
Charu Banga ◽  
Amitabh Gupta
Keyword(s):  
Factor Analysis ◽  
Market Share ◽  
Mutual Fund ◽  
Ordinary Least Squares ◽  
Fund Managers ◽  
Significant Difference ◽  
Fund Industry ◽  
Mutual Fund Industry ◽  
Asset Size ◽  
Management Capabilities

The Indian industry has seen a phenomenal consolidation through a spate of mergers and takeovers during the last decade. The mutual fund industry in India is no exception. It therefore becomes very important to understand the motives of mergers and takeovers in the Indian mutual fund industry. However, there is a significant difference between a corporate merger and the merger of a mutual fund. The present study uses various motives (variables) of corporate mergers and takeovers that fit in case of motives for mergers and takeovers of mutual fund schemes. As far as India is concerned, this is the first study of its kind; even in the international arena, limited research is available in this area. A two-stage multivariate procedure is used to identify the important factors that drive the merger of a mutual fund scheme from the viewpoint of an acquirer. The present study conducts a survey of 65 fund managers through a questionnaire containing fifteen statements to examine the motives behind the mergers and takeovers of mutual fund schemes. It checks the internal consistency and the reliability of the data using the Cronbach's Alpha. It performs an exploratory factor analysis using the fifteen statements in the questionnaire as different variables. Finally, it examines the important motives by conducting an ordinary least squares regression using the factors extracted from factor analysis. The results reveal the following: The factor analysis produces six broad factors, viz., attractive price, fund governance, expansion of marketing and management capabilities, expansion of asset size, benefits of diversification, and increase in the market share. These six factors are then subjected to multiple regression with increase in the market share as the dependent variable. The regression shows that three out of the five factors tested are significant. The findings of the study suggest that expansion of marketing and management capabilities, expansion of asset size, and benefits of diversification are the three most important motives behind mergers and takeovers of mutual fund schemes in India. The study is valuable to the financial economists, asset management companies, fund managers, unit holders, and the regulators in order to understand the important factors that influence mergers and takeovers of mutual fund schemes in India and their implications in order to make regulations for the mutual fund industry.

scholarly journals Relative Performance, Risk and Entry in the Mutual Fund Industry

2006 ◽  
Vol 6 (1) ◽  
Author(s):  
Gyongyi Loranth ◽  
Emanuela Sciubba
Keyword(s):  
Performance Evaluation ◽  
Mutual Fund ◽  
Relative Performance ◽  
Relative Performance Evaluation ◽  
Portfolio Decisions ◽  
Fund Managers ◽  
Performance Risk ◽  
Fund Industry ◽  
Mutual Fund Industry ◽  
The Impact

Abstract This paper analyses the impact of the emergence of new funds on the portfolio decisions of mutual fund managers who are evaluated on the basis of relative performance within a dynamic model. Recent theoretical literature has pointed to the inefficiencies in portfolio selection caused by relative performance evaluation of fund managers. We find that the on-going process of creation of new funds, by posing an entry threat to the incumbent fund managers, greatly alleviates these inefficiencies. Hence the transitory market structure that characterises the mutual fund industry could explain why relative performance evaluation is widely in use.

What Drives Market Share in the Mutual Fund Industry?

CFA Digest ◽  
2012 ◽  
Vol 42 (2) ◽  
pp. 106-107
Author(s):  
Sadaf Aliuddin
Keyword(s):  
Market Share ◽  
Mutual Fund ◽  
Fund Industry ◽  
Mutual Fund Industry
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