How Does Size Affect Mutual Fund Behavior?

  • Author(s): JOSHUA M. POLLET, MUNGO WILSON
  • Published: Nov 11, 2008
  • Pages: 2941-2969
  • DOI: 10.1111/j.1540-6261.2008.01417.x

ABSTRACT

If actively managed mutual funds suffer from diminishing returns to scale, funds should alter investment behavior as assets under management increase. Although asset growth has little effect on the behavior of the typical fund, we find that large funds and small‐cap funds diversify their portfolios in response to growth. Greater diversification, especially for small‐cap funds, is associated with better performance. Fund family growth is related to the introduction of new funds that hold different stocks from their existing siblings. Funds with many siblings diversify less rapidly as they grow, suggesting that the fund family may influence a fund's portfolio strategy.

Jump to menu

Main Navigation

Search the Site / Journal

Search Keywords

Search Tips

Members' Login

Credentials

Members' Options

Site Footer

View Mobile Version