Crowding: Evidence from Fund Managerial Structure

Reallocation of Mutual Fund Managers and Capital Raising Ability

“…Zambrana and Zapatero (2020) show that managers with different skill specifications who work together can maximize fund performance. Harvey et al (2020) find that team management can lower the decreasing returns to scale. Fedyk et al (2020) show that it reduces uninformed overconfident trading.…”

A Horizon‐Based Decomposition of Mutual Fund Value Added Using Transactions

“…As discussed in Section I, a smaller λ S can be caused by the higher liquidity of the stocks traded (e.g., Pástor, Stambaugh, and Taylor (2020)), a larger number of investment ideas (e.g., Harvey et al (2021)), or superior trade execution skill (e.g., Anand et al (2012)). To further pin down the sources of highturnover funds' smaller price impact cost parameter λ S at the fund level, in Table XIII we report the average market capitalization of stock holdings, number of stocks, and trade execution skill by turnover quintile and holding period.…”

“…This approach differs from the literature on decreasing returns to scale, which simply models the erosion of alpha as a linear function of fund size (e.g., Zhu (2018) and Barras, Gagliardini, and Scaillet (2022)). 5 We further uncover the determinants of the decreasing returns-to-scale parameters of funds using transaction data and requantify the importance of spreading trades over time relative to other determinants of decreasing returns to scale in the literature including stock liquidity, number of investment ideas (e.g., Harvey et al (2021)), and trade execution skill (e.g., Anand et al (2012)). Evidence in our paper suggests that the flexibility to spread trades over time is the most important determinant of funds' decreasing returns to scale across fund turnover quintiles, which explains why the scalability of high-turnover funds is lower than that of low-turnover funds as documented in Barras, Gagliardini, and Scaillet (2022).…”

Managerial characteristics and performance of eurozone mutual funds

“…This difference makes them hard to compare, and thus performance attribution becomes difficult without knowledge of how responsibilities are divided within the fund. Although other studies (e.g., Chevalier & Ellison, 1999a; Harvey et al, 2021) only require managers to be the sole manager of the fund for a sufficient part of or whole sample period, for the sake of more accurate performance attribution we include a fund in our sample only if a single manager was in charge over at least 30 consecutive months. For funds that are team managed for only part of our sample period, but the sole manager was part of that team, we include the fund in our sample.…”

“…These can include differences in the 19 As the primary benchmarks of the funds, we use those reported by Morningstar rather than the benchmarks stated by the funds in their brochure. This is to avoid the cherry-picking bias (e.g., Harvey et al, 2021). 20 Similar to Chen et al (2004), we also consider the effect that family size may have on fund performance.…”