Title
Why do Fund Families Release Underperforming Incubated Mutual Funds?
Publication Date
2016
Document Type
Article
Abstract
Although the average incubated mutual fund outperforms non-incubated funds by up to 3.41% annually, a large number of released funds underperform during incubation. We find that launching underperforming incubated mutual funds is associated with objectives that are attracting large inflows and lower relative risk. These findings are consistent with the use of incubation to maximize fee revenue through means other than the flow-to-performance relationship. We also find that underperforming incubated funds are incubated longer, suggesting that families release funds opportunistically to take advantage of outperformance when it is observed.
Original Citation
Shirley, S.E., & Stark, J.R. (2016). Why do Fund Families Release Underperforming Incubated Mutual Funds? Financial Management, 45(3), 507-528. https://doi.org/10.1111/fima.12103
Identifier
Virtual Commons Citation
Shirley, Sara E. and Stark, Jeffrey R. (2016). Why do Fund Families Release Underperforming Incubated Mutual Funds?. In Accounting and Finance Faculty Publications. Paper 4.
Available at: https://vc.bridgew.edu/accounting_fac/4