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Risk management and team-managed mutual funds

Author

Listed:
  • Bär, Michaela
  • Ciccotello, Conrad S.
  • Ruenzi, Stefan

Abstract

This paper relies on mutual fund industry data to examine the consequences of a specific risk-management policy. The focus is on the decision by a mutual fund sponsor to employ a fund management team instead of a solo manager. The analysis shows that team-managed funds tend to have (1) more reliable investment styles; (2) less tournament behaviour; and (3) more stable performance over time than solo-managed funds. While risk-adjusted net returns of team-managed funds are slightly lower than those of their solo-managed counterparts, team-managed funds attract significantly more new cash flows from investors. Thus, the paper provides empirical evidence that there is not necessarily a conflict between the objectives of risk management and value maximisation in financial institutions.

Suggested Citation

  • Bär, Michaela & Ciccotello, Conrad S. & Ruenzi, Stefan, 2010. "Risk management and team-managed mutual funds," Journal of Risk Management in Financial Institutions, Henry Stewart Publications, vol. 4(1), pages 57-73, December.
    • Handle: RePEc:aza:rmfi00:y:2010:v:4:i:1:p:57-73
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    More about this item

    Keywords

    conflicts of interest; risk management; teams; mutual funds; G01; G23; G29;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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