Retail investors do better if a fund has an institutional twin

New research from CFA Digest shows that governance and results are better in a retail fund when there is a parallel institutional class running alongside it. Investors get better risk-adjusted performance driven by stronger governance, reflecting the increased scrutiny that twin funds get. http://cfa.is/13Knpcu This averaged an annual 1.5%, well above the typical extra fees on retail funds. The stronger governance delivered improved efforts by managers, greater monitoring, less use of soft $, reduced fees, and reduced agency problems. There was a clear link between governance and returns. The study was done on 463 twin funds in US equities using Morningstar data over 14 years to 2009. It is summarised in CFA Digest by Biharilal Deora CFA.

No comments yet... Be the first to leave a reply!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: