Does an Asset Management Firm's Stock Holding Made in Response to Buy-Side Analysts' Prior Recommendations Induce Subsequent Forecast Optimism?

2015 ◽  
Vol 28 (2) ◽  
pp. 55-68 ◽  
Author(s):  
Hun-Tong Tan ◽  
Rong-Ruey Duh ◽  
Shean-Bii Chiu ◽  
Shu-Hsing Li
Keyword(s):  
Asset Management ◽  
Mutual Fund ◽  
Data Availability ◽  
Control Group ◽  
Fund Managers ◽  
Made In ◽  
Accuracy Goal

ABSTRACT In this study, we examine whether buy-side analysts' forecasts are biased when they cover stocks that are held by the mutual fund. Specifically, we conduct an experiment with buy-side analysts and fund managers in which we manipulate whether the forecasts are released to colleagues and clients or kept private, and whether the mutual fund has made an investment in the stock based on the recommendation of the analyst. We posit and find evidence that when forecasts are made available to other colleagues and clients, participants' forecasts are more positive when the mutual fund has a holding (versus no holding) in a stock based on the buy-side analysts' recommendations. These forecasts are also more optimistic than a control group where participants have an accuracy goal. This effect disappears when the forecasts are kept private. In a supplementary experiment, we document that the effect is conscious, consistent with a strategic justification mechanism. Data Availability: Contact the authors.

Friends in Need Are Friends Indeed: An Analysis of Social Ties between Financial Analysts and Mutual Fund Managers

2018 ◽  
Vol 94 (1) ◽  
pp. 153-181 ◽  
Author(s):  
Zhaoyang Gu ◽  
Zengquan Li ◽  
Yong George Yang ◽  
Guangqing Li
Keyword(s):  
Mutual Fund ◽  
Social Ties ◽  
Financial Analysts ◽  
Data Availability ◽  
Fund Manager ◽  
Mutual Fund Managers ◽  
Business Decisions ◽  
The Public ◽  
Fund Managers ◽  
Jel Classifications

ABSTRACT We examine how hometown, school, and workplace ties between financial analysts and mutual fund managers affect their business decisions. We show that a fund manager is more likely to hold stocks covered by analysts with whom she is socially connected, and that she also makes higher profits from these holdings. Such social tie-related holding returns are higher among more opaque firms. In return, a fund manager tends to cast her star analyst votes in favor of her connected analysts, and her fund company is more likely to allocate trading commissions to her connected analysts' brokerages. Additional tests indicate that analysts more actively acquire information (through conducting corporate site visits) and issue more optimistically biased recommendations for stocks held by fund managers with whom they are connected. Overall, our results illustrate the pronounced influence of social networks on the behaviors of analysts and fund managers. JEL Classifications: G10; G23; M40. Data Availability: Data are available from the public sources cited in the text.

Pedigree vs. Grit: Predicting Mutual Fund Manager Performance

2017 ◽  
pp. 1-6
Author(s):  
Péter Esö ◽  
Graeme Hunter ◽  
Peter Klibanoff ◽  
Karl Schmedders
Keyword(s):  
Linear Regression ◽  
Asset Management ◽  
Mutual Fund ◽  
Success Factors ◽  
Linear Regression Analysis ◽  
Fund Manager ◽  
Mutual Fund Managers ◽  
Fund Managers ◽  
Mutual Fund Manager ◽  
Starting Point

An asset management company must replace the manager of its two signature mutual funds, who is about to retire. Two candidates have been short-listed. The management team is divided and cannot decide which of the two candidates would make the better mutual fund manager. The retiring manager presents a linear regression model to examine success factors of mutual fund managers. This linear regression is the starting point for the subsequent analysis.Application of linear regression analysis to analyze the performance of mutual fund managers.

scholarly journals Perception and Satisfaction toward Mutual Fund Investors in Andhra Pradesh

2019 ◽  
Vol 8 (2S6) ◽  
pp. 542-544
Keyword(s):  
Asset Management ◽  
Mutual Fund ◽  
Andhra Pradesh ◽  
Vital Role ◽  
Primary Data ◽  
Key Factors ◽  
Past Performance ◽  
Statistical Tool ◽  
Fund Managers ◽  
Selection Of

The present study has been emphasized on the investor’s attitude towards mutual fund investments in Andhra Pradesh. The study has categorized the investors in small and large based on the investment criteria. The primary data has been collected and examined with the help of statistical tool of discriminant analysis. The study result stated that the past performance, liquidity and brand equity are the key factors which are playing the vital role in selection of mutual fund schemes for the investments. The investors’ expectations have been analyses and the result reveals that the stable portfolio with returns performance. This paper is useful to the stake holders of mutual fund industry such as asset management companies, investors, regulators and fund managers.

Emerging market mutual fund performance: evidence for China

2017 ◽  
Vol 11 (2) ◽  
pp. 167-187 ◽  
Author(s):  
Zia-ur-Rehman Rao ◽  
Muhammad Zubair Tauni ◽  
Amjad Iqbal ◽  
Muhammad Umar
Keyword(s):  
Asset Management ◽  
Mutual Fund ◽  
Factor Model ◽  
Emerging Market ◽  
Market Timing ◽  
Content Type ◽  
Fund Managers ◽  
Developed Markets ◽  
Timing Ability ◽  
Equity Funds

Purpose The purpose of this paper is to find whether Chinese equity funds outperform the market and do Chinese fund managers possess positive market timing ability. This study also aims to investigate whether well-performing (worst) funds of last year continue to perform well (worst) in the following year. Design/methodology/approach Capital Asset Pricing Model and Carhart four-factor model are used for performance analysis, whereas for analyzing market timing ability, the Treynor and Mazuy (1966) and Henriksson and Merton (1981) models are applied. To investigate persistence in the performance of Chinese equity funds, all equity funds are divided, on the basis of performance in the past 12 months, into three equally weighted groups (high, middle and low) and then observed for next 12 months. After that, groups are again rebalanced according to their performance. This study uses a panel regression model for analysis. Findings Chinese equity funds are successful in providing higher than market returns, and fund managers possess positive market timing ability. The authors find that Chinese equity funds do not show persistence in performance as witnessed in developed markets. Well-performing funds (worst funds) of last year do not continue to provide higher (lower) return in the following year. Moreover, the authors detect positive relationship of fund size, age and expense ratio with the fund’s performance. Overall results suggest that emerging market equity funds show better performance than that of developed markets. Practical implications Investors are better off if they invest in equity funds instead of index funds, as results illustrate that equity funds outperformed the market. Further, the strategy of buying well-performing funds of last year and selling poorly performing funds of last year does not look very attractive in China. This study helps investors to understand the Chinese managed funds industry, and such an understanding is also helpful for fund managers and asset management companies who use performance information in marketing strategies. Originality/value This is the first study to investigate the performance persistence in Chinese equity funds and also contributes to the literature about the performance and market timing ability of equity funds. The study takes the sample of 520 equity funds for the period from 2004 to 2014, which includes a period of financial crisis of 2008.

Prepare for the magnifying glass: SEC hikes scrutiny of asset managers – 4 steps to consider

2015 ◽  
Vol 16 (1) ◽  
pp. 49-51
Author(s):  
Perrie Michael Weiner ◽  
Patrick Hunnius ◽  
Grant Alexander
Keyword(s):  
Mutual Funds ◽  
Asset Management ◽  
Hedge Funds ◽  
Mutual Fund ◽  
Sudden Change ◽  
Protective Measure ◽  
Mutual Fund Managers ◽  
Content Type ◽  
Fund Managers ◽  
Asset Managers

Purpose – To discuss the Securities and Exchange Commission’s (SEC’s) likely preparation of new rules to increase the monitoring and oversight of various asset funds, including hedge funds and alternative mutual funds, and recommends protective measure for fund managers to take. Design/methodology/approach – Discusses the SEC’s increasing concerns about risks related to the asset management industry and how those concerns may lead to additional scrutiny and regulation. Recommends four steps for alternative mutual fund managers to take at this time to protect their interests. Findings – The SEC’s potential regulatory action is in response to apparent increasing concern that the multitrillion-dollar asset management industry could create substantial instability to the financial system with the occurrence of a significant event, such as a sudden change in interest rates or widespread investor redemptions. It has been suggested that the proposed sweep of alternative mutual funds is part of a larger strategy by the SEC to bring the alternative mutual funds, and similarly situated entities such as asset managers and hedge funds, under the same regulatory umbrella imposed upon large banks and similarly situated financial institutions in response to the 2008 recession. Practical implications – Preparation will go a long way in dealing with what appears to be a developing mine field of new regulations, and potential enforcement actions, from the federal government. Originality/value – Knowing that increasing SEC scrutiny, such as inquiries and subpoenas, may be just around the corner, the precautionary measures outlined in this article will help alternative mutual fund managers protect their interests.

A Critical Analysis of Selected Public and Private Mutual Fund Schemes in India

2019 ◽  
Vol 118 (8) ◽  
pp. 28-34
Author(s):  
Dr. V. Murali Krishna ◽  
Dr T. Hima Bindu ◽  
Dr. Ravikumar Gunakala
Keyword(s):  
Mutual Funds ◽  
Capital Market ◽  
Mutual Fund ◽  
Portfolio Diversification ◽  
Financial Intermediaries ◽  
Public And Private ◽  
Fund Managers ◽  
Fixed Base ◽  
Banking Institutions ◽  
Different Levels

Mutual Fund Industry is one of the emerged dominant financial intermediaries in Indian Capital Market. The main objective of investing in a mutual fund is to diversify risk. Though the mutual fund invests in diversified portfolio, the fund managers take different levels of risk in order to achieve the schemes objectives. Mutual funds allow portfolio diversification and relative risk management through collection of funds from the savers/investors, the same investing in equity and debt stocks. This type of invested funds is managed by professional experts called as fund managers Funds are categorized as income should fixed base in India are a kind of mutual fund which makes investment in debt securities that have been issued to the corporate, banking institutions and to government in general

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