We investigate how competition between fund managers and disclosure of other managers’ fees and performance influence fees, risk taken, earnings, and investor concentration, with a controlled lab experiment. We find that more competition and disclosure lead to a reduction in fees: The relative decrease is larger for management fees than for performance fees. Although, the decrease in fees does not affect managers’ investment strategies, it increases investors’ readiness to entrust their funds to a manager. This leads to higher overall earnings, with the benefits going to investors and to fund managers able to attract more or new investors. The empirical literature provides a mixed picture of the consequences of competition in delegated portfolio management, but our results suggest that more competition is mostly beneficial for the development of capital markets.

More competition in delegated portfolio management: A win-win situation? An experimental analysis / Balmus, T.; Huber, J.; Ploner, M.. - In: JOURNAL OF ECONOMIC BEHAVIOR & ORGANIZATION. - ISSN 0167-2681. - 178:(2020), pp. 777-800. [10.1016/j.jebo.2020.08.017]

More competition in delegated portfolio management: A win-win situation? An experimental analysis

Balmus T.;Ploner M.
2020-01-01

Abstract

We investigate how competition between fund managers and disclosure of other managers’ fees and performance influence fees, risk taken, earnings, and investor concentration, with a controlled lab experiment. We find that more competition and disclosure lead to a reduction in fees: The relative decrease is larger for management fees than for performance fees. Although, the decrease in fees does not affect managers’ investment strategies, it increases investors’ readiness to entrust their funds to a manager. This leads to higher overall earnings, with the benefits going to investors and to fund managers able to attract more or new investors. The empirical literature provides a mixed picture of the consequences of competition in delegated portfolio management, but our results suggest that more competition is mostly beneficial for the development of capital markets.
2020
Balmus, T.; Huber, J.; Ploner, M.
More competition in delegated portfolio management: A win-win situation? An experimental analysis / Balmus, T.; Huber, J.; Ploner, M.. - In: JOURNAL OF ECONOMIC BEHAVIOR & ORGANIZATION. - ISSN 0167-2681. - 178:(2020), pp. 777-800. [10.1016/j.jebo.2020.08.017]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11572/279241
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