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

Arturo Bris; Huseyin Gulen; Padma Kadiyala; P. Raghavendra Rau

doi:10.1093/rfs/hhl017

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

Arturo Bris¹; Huseyin Gulen²; Padma Kadiyala³; P. Raghavendra Rau⁴

¹ IMD, ECGI · ² Virginia Tech · ³ Pace University · ⁴ Purdue University West Lafayette

Review of Financial Studies 2007

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 reopening, suggesting that the fund closure decision does not provide information about superior fund managers. (JEL G14, G23)

DOI: 10.1093/rfs/hhl017
Volume: 20 (3)
Pages: 953-982
Language: en
Export: BibTeX
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