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Good Stewards, Cheap Talkers, or Family Men? The Impact of Mutual Fund Closures on Fund Managers, Flows, Fees, and Performance

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  • Arturo Bris
  • Huseyin Gulen
  • Padmaja Kadiyala
  • Raghavendra Rau

Abstract

We examine a sample of 125 equity mutual funds that closed to new investment between 1993 and 2004. We find that funds close following a period of superior performance and abnormal fund inflows. Fund managers raise their fees when they close to compensate managers for losses in income due to the restrictions in size imposed by the fund closure decision. Managers reopen when fund size declines. However, they do not earn superior returns after re-opening, suggesting that the fund closure decision does not provide information about superior fund managers.

Suggested Citation

  • Arturo Bris & Huseyin Gulen & Padmaja Kadiyala & Raghavendra Rau, 2005. "Good Stewards, Cheap Talkers, or Family Men? The Impact of Mutual Fund Closures on Fund Managers, Flows, Fees, and Performance," Yale School of Management Working Papers amz2658, Yale School of Management, revised 01 Sep 2006.
    • Handle: RePEc:ysm:wpaper:amz2658
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    References listed on IDEAS

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