Mutual fund study finds “first direct evidence of trade off between performance and marketing”
| Aug 24th, 2010 | Filed under: Academic Research, Retail Investing, Today's Post | By: Alpha Male |
|
Advocates for hedge funds often point to performance-based fees as evidence of greater alignment between manager and investor. “We make money when you make money”, they say. However, critics point to the asymmetry of these fees and quip that the hedge fund mantra should be more like: “We’re not happy until you’re not happy.”
In any case, mutual funds, with their asset-based fees, lack such explicit alignment of interests. But advocates for mutual funds will often point out that the link between the interests of investors (returns) and those of the manager (fees) is indirect, but still very real. After all, better performance means more assets will be attracted to the fund and the manager will generate more asset-based revenue.
To continue reading this article please login (at the right) or click here to learn more about accessing our archives.
Related Posts
- Short-Ban study finds no evidence of “expected effect of the new regulations”
- Study finds evidence of alpha in an often-overlooked alternative asset class: REITs
- Regulators take note: New research finds mutual fund managers do better, not worse, when they also manage “side-by-side” hedge funds
- Closet indexing continues to flourish in mutual fund land (and bring down average performance)
- A Harbinger of things to come? Study finds mega hedge fund business model “does not appear sustainable”
[...] work was promptly featured in a posting on the AllAboutAlpha blog and was highlighted (“A New Study Casts Fundsters in an Unflattering Light”) on [...]