Economics, Econometrics and Finance
4 years ago

Mutual fund managers coordinate risky bets for extreme performance gains

1 view
SSRN Electronic Journal
Coordinated Betting by Multi-Fund Managers
Gelly Fu

Paper Summary

Multi-fund managers coordinate their investments to increase the chances of one fund performing exceptionally well, even though it doesn't maximize each fund's performance. They take on more individual risk, have active portfolios, trade aggressively, and invest in high-risk stocks. This behavior may create a new issue in the mutual fund industry due to how managers organize their investments.

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