Management sub-advising in the mutual fund industry

• 成果类型: Article
• 署名作者: Moreno, David; Rodriguez, Rosa; Zambrana, Rafael
• 署名单位: Universidad Carlos III de Madrid; Universidade Nova de Lisboa
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2018.01.004
• 发表日期: 2018
• 页码: 567-587
• 关键词: Outsourcing; Sub-advisor; Mutual funds; Management company; incentive contracts; FUND PERFORMANCE; market share; Agency issue

摘要

This is a study of how contractual mechanisms can mitigate agency conflicts in sub advised mutual funds. Sub-advising contracts allow fund families to expand their product offerings to include new investment styles and thereby gain market share. We show that costly contractual arrangements, such as co-branding, multi-advising, and performance based compensation, can mitigate agency conflicts in outsourcing and protect investors from potential underperformance. Fund families will find it cost-effective to implement such incentive mechanisms only when investors are sophisticated in assessing manager skill. The findings help to explain why a large percentage of fund families outsource their funds to advisory firms. (C) 2018 Elsevier B.V. All rights reserved.