Jack of all trades versus specialists: Fund family specialization and mutual fund performance

摘要

This study is the first to explore the impact of specialization decisions by a fund family, as reflected by its asset-based concentration in the active management segment (ACF), on the performance of its equity mutual funds. We find that active funds of fund families with higher ACF enjoy superior performance and greater investor capital allocation. Importantly, funds of fund families with higher ACF exhibit greater reliance on private information production, a clear signal of managerial skill. Our findings are not explained by heterogeneity in total ownership costs and outsourcing arrangements of the fund family. By exploiting a quasi-experiment involving fund families' sponsorship acquisition events, we show that fund performance deteriorates markedly when the acquiring fund family has lower ACF than the selling fund family. Last, we show that funds affiliated to fund families with higher ACF enjoy significant institutional advantages from better family-level allocation of resources to information production.