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Portfolio pumping in mutual fund families

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  • Wang, Pingle

Abstract

This paper investigates portfolio pumping at the fund family level, where non-star fund managers strategically purchase stocks held by star funds in the family to inflate their quarter-end performance. Star funds that engage in such activities show inflated performance after 2002 when the Securities and Exchange Commission increased regulation on portfolio pumping. Stocks pumped by the strategy show strong reversals at the quarter end. Moreover, despite a minor underperformance stemming from portfolio misallocation, non-star fund managers pumping for star funds receive abnormally high subsequent flows, suggesting a pattern of family subsidization.

Suggested Citation

  • Wang, Pingle, 2024. "Portfolio pumping in mutual fund families," Journal of Financial Economics, Elsevier, vol. 156(C).
    • Handle: RePEc:eee:jfinec:v:156:y:2024:i:c:s0304405x2400062x
    DOI: 10.1016/j.jfineco.2024.103839
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    References listed on IDEAS

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    More about this item

    Keywords

    Mutual funds; Portfolio pumping; Family strategy;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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