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The Efficiency of Performance‐Based Fee Funds
Author(s) -
DíazMendoza Ana C.,
LópezEspinosa Germán,
Martínez Miguel A.
Publication year - 2014
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/j.1468-036x.2012.00654.x
Subject(s) - performance fee , management fee , business , fund of funds , passive management , global assets under management , closed end fund , finance , open end fund , mutual fund , investment management , actuarial science , institutional investor , fund administration , corporate governance , market liquidity
This paper compares the efficiency of mutual funds that charge management fees based totally or partially on returns (performance) with those that charge them exclusively on assets under management. We analyse Spanish risky mutual funds during 1999–2009 for which both types of management fees are authorised. We find that performance‐based fee funds perform significantly better than the other risky funds considered. Moreover, a strongly positive performance‐expenses relation is found for such funds, and negative for the other. These results seem to indicate more efficient management in performance‐based fee funds, in contrast with their low presence in the fund industry .