The effect of management design on the portfolio concentration and performance of mutual funds

• Autores: Eitan Goldman, Zhenzhen Sun, Xiyu (Thomas) Zhou
• Localización: Financial analysts journal, ISSN-e 0015-198X, Vol. 72, Nº. 4, 2016, págs. 49-61
• Idioma: inglés
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• Resumen

  • We show that the performance of actively managed equity mutual funds increases when portfolios are concentrated in the top one or two stocks within each industry sector. Funds managed by a single manager have much more concentrated portfolios, tend to perform better, and have higher expense ratios than funds managed by multiple managers. We observe that when a fund’s management design is changed from single manager to multiple managers, the portfolio’s within- and cross-sector concentration, performance, and expense ratios decrease.