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Fund Family Tournament and Performance Consequences: Evidence from the UK fund industry

Author

Listed:
  • Zhichao Zhang

    (Durham University, UK)

  • Li Ding

    (Durham University, UK)

  • Si Zhou

    (Durham University, UK)

  • Yaoyao Fu

    (Durham University, UK)

Abstract

By applying tournament analysis to the UK Unit Trusts data, the results support significant risk shifting in the family tournament; i.e. interim winning managers tend to increase their level of risk exposure more than losing managers. It also shows that the risk-adjusted returns of the winners outperform those of the losers following the risk taking, which implies that risk altering can be regarded as an indication of managers’ superior ability. However, the tournament behaviour can still be a costly strategy for investors, since winners can be seen to beat losers in the observed returns due to the deterioration in the performance of their major portfolio holdings.

Suggested Citation

  • Zhichao Zhang & Li Ding & Si Zhou & Yaoyao Fu, 2014. "Fund Family Tournament and Performance Consequences: Evidence from the UK fund industry," Multinational Finance Journal, Multinational Finance Journal, vol. 18(1-2), pages 43-84, March - J.
    • Handle: RePEc:mfj:journl:v:18:y:2014:i:1-2:p:43-84
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    References listed on IDEAS

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    1. Alda, Mercedes, 2018. "A strategic fund family business decision: The pension fund liquidation," Journal of Business Research, Elsevier, vol. 91(C), pages 248-265.

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    More about this item

    Keywords

    mutual fund family; fund performance; tournament; risk taking;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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