Human Capital and the Structure of the Mutual Fund Industry


Matthew Spiegel
  • Speaker
Yale School of Management, Yale University

Event Information

Type
Research Seminar
Programme
Finance
Date
Thu. 18 Oct. 2012
Contact
Elvira Sojli
Time
15:30-17:00 hours
Location
Mandeville Building T3-42


Abstract

Production functions necessarily play a significant role in determining an industry’s ultimate organization. In the mutual fund industry human capital is one of the primary inputs and thus one would expect the industry’s structure to work towards its optimal use. This paper shows that the efficient allocation of human capital helps to explain the existence of mutual fund families as well as and the number and quality of managers assigned to various portfolios in a family and the resources the family devotes to a particular sector. Empirically, it appears the industry has arranged itself so that talented managers can stand out by running funds where: (1) the competition is thin enough that financial research is likely be improve performance by enough to be noticeable, (2) the fund family’s marketing arm can publicize good performance to a degree that it attracts new capital and (3) where a family has committed above average investment research resources. As a result we find that fund families exist in part to allocate talented managers into areas with superior support systems that a standalone operation cannot easily duplicate.

Download Spiegel's paper  

This event is an Erasmus Finance Seminar. The Erasmus Finance Seminar series brings prominent researchers in Finance from all over the world to Rotterdam.
Elvira Sojli
  • Coordinator