Good stewards, cheap talkers, or family men? The impact
of mutual fund closures on fund managers, flows, fees, and performance
Arturo Bris, Huseyin Gulen, Padma Kadiyala and P. Raghavendra
Rau
Yale University, Virginia Tech University, Fairleigh
Dickinson University, and Purdue University
We examine a sample of 125 equity mutual funds that closed to new investment between 1993 and
2004. We find that funds close following a period of superior performance and abnormal fund
inflows. Fund managers raise their fees when they close to compensate managers for
losses in income due to the restrictions in size imposed by the fund closure decision. Managers
reopen when fund size declines. However, they do not earn superior returns after re-opening,
suggesting that the fund closure decision does not provide information about superior fund managers.
This paper is forthcoming in the Review of Financial Studies.
This paper has been awarded
Download this paper
|
