Fund Family Tournament and Performance Consequences: Evidence from the UK Fund Industry

Multinational Finance Journal, 2014, 18 (1/2): 43-84

42 Pages Posted: 24 Feb 2014 Last revised: 16 Mar 2019

See all articles by Zhichao Zhang

Zhichao Zhang

Durham University - Durham Business School

Li Ding

Durham Business School

Si Zhou

Shanghai University

Yaoyao Fu

Durham Business School

Multiple version iconThere are 2 versions of this paper

Date Written: February 23, 2014

Abstract

By applying tournament analysis to the UK Unit Trusts data, the results support significant risk shifting in the family tournament; i.e. interim winning managers tend to increase their level of risk exposure more than losing managers. It also shows that the risk-adjusted returns of the winners outperform those of the losers following the risk taking, which implies that risk altering can be regarded as an indication of managers’ superior ability. However, the tournament behaviour can still be a costly strategy for investors, since winners can be seen to beat losers in the observed returns due to the deterioration in the performance of their major portfolio holdings.

Keywords: Mutual fund family; Fund performance; Tournament; Risk Taking

JEL Classification: G20; G23

Suggested Citation

Zhang, Zhichao and Ding, Li and Zhou, Si and Fu, Yaoyao, Fund Family Tournament and Performance Consequences: Evidence from the UK Fund Industry (February 23, 2014). Multinational Finance Journal, 2014, 18 (1/2): 43-84, Available at SSRN: https://ssrn.com/abstract=2400060

Zhichao Zhang

Durham University - Durham Business School ( email )

Mill Hill Lane
Durham, Durham DH1 3LB
United Kingdom

Li Ding

Durham Business School ( email )

Mill Hill Lane
Durham, Durham DH1 3LB
United Kingdom

Si Zhou (Contact Author)

Shanghai University ( email )

Room 522, Building 1,
Shanghai University,
Shanghai, Shanghai 20044
China

Yaoyao Fu

Durham Business School ( email )

Mill Hill Lane
Durham, Durham DH1 3LB
United Kingdom

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