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Timid performance fees in mutual funds

Author

Listed:
  • Teresa Corzo Santamaría

    (Universidad Pontificia Comillas)

  • Carlos Martinez de Ibarreta

    (Universidad Pontificia Comillas)

  • Juan Rodriguez Calvo

    (Universidad Pontificia Comillas)

Abstract

In this study, we empirically explore the implications of a non-standard mutual fund performance fee structure. This contract deviates from the designs recommended in previous literature, in that, it lacks a benchmark portfolio and fails to apply a high-performance fee component, making a timid attempt to align investors’ and managers’ interests. Using a panel data model, we compare the risk-adjusted performance measures for funds with and without performance fees, within the same investment policies. Some investment categories, that charge a performance fee component, earn superior risk-adjusted returns; additionally, they attract investors. The empirical implications of this study back up the prevailing theory.

Suggested Citation

  • Teresa Corzo Santamaría & Carlos Martinez de Ibarreta & Juan Rodriguez Calvo, 2018. "Timid performance fees in mutual funds," Journal of Asset Management, Palgrave Macmillan, vol. 19(1), pages 64-77, January.
    • Handle: RePEc:pal:assmgt:v:19:y:2018:i:1:d:10.1057_s41260-017-0061-8
    DOI: 10.1057/s41260-017-0061-8
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    References listed on IDEAS

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