Attracting flows by attracting big clients

conflicts of interest and mutual fund portfolio choice

Attracting flows by attracting big clients
Lauren Cohen, Lauren Cohen
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Last edited by MARC Bot
May 28, 2023 | History

Attracting flows by attracting big clients

conflicts of interest and mutual fund portfolio choice

We explore a new channel for attracting inflows using a unique dataset of corporate 401(k) retirement plans and their mutual fund family trustees. Families secure substantial inflows by being named trustee of a 401(k) plan. This affords the plan sponsor potential influence on the family's portfolio decisions. Consistent with this, we find that family trustees significantly overweight their 401(k) client firm's stock. Trustee overweighting is more pronounced when the conflict of interest of the trustee family is more severe and when other mutual funds are selling the client firm's stock. This overweighting is not explained by superior information. We quantify a potentially large benefit to the 401(k) sponsor firm of having its price propped up by its trustee fund's more severe overweighting. We also estimate the resulting loss to mutual fund investors, which can be large in some cases.

Publish Date
Language
English
Pages
45

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Book Details


Edition Notes

"January 2008"--Publisher's web site.

Includes bibliographical references.

Published in
Boston]
Series
Working paper / Harvard Business School -- 08-054, Working paper (Harvard Business School) -- 08-054

The Physical Object

Pagination
45 p.
Number of pages
45

ID Numbers

Open Library
OL48025752M
OCLC/WorldCat
191879235

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May 28, 2023 Created by MARC Bot Imported from harvard_bibliographic_metadata record