Cross trading by investment advisers: Implications for mutual fund performance

Casavecchia, L; Tiwari, A

Cross trading by investment advisers: Implications for mutual fund performance

Casavecchia, L

Tiwari, A

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Publication Type:: Journal Article
Citation:: Journal of Financial Intermediation, 2016, 25 pp. 99 - 130
Issue Date:: 2016-01-01

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Field	Value	Language
dc.contributor.author	Casavecchia, L https://orcid.org/0000-0003-1452-3059	en_US
dc.contributor.author	Tiwari, A	en_US
dc.date.issued	2016-01-01	en_US
dc.identifier.citation	Journal of Financial Intermediation, 2016, 25 pp. 99 - 130	en_US
dc.identifier.issn	1042-9573	en_US
dc.identifier.uri	http://hdl.handle.net/10453/121974
dc.description.abstract	© 2015 Elsevier Inc. Using a unique dataset we provide new evidence on the significant penalty on client fund performance due to conflicts of interest related to the cross trading (TCT) activities of mutual fund advisers: funds managed by advisers in the top TCT quintile significantly underperform funds managed by advisers in the bottom TCT quintile by 1% per year. Adviser incentives to engage in cross trading are directly related to their opportunities for generating revenues from affiliated trading operations. Additional tests suggest that the significantly higher trading commissions paid by client funds of high-TCT advisers are a major source of their under-performance.	en_US
dc.relation.ispartof	Journal of Financial Intermediation	en_US
dc.relation.isbasedon	10.1016/j.jfi.2015.06.001	en_US
dc.subject.classification	Finance	en_US
dc.title	Cross trading by investment advisers: Implications for mutual fund performance	en_US
dc.type	Journal Article
utslib.citation.volume	25	en_US
utslib.for	1502 Banking, Finance and Investment	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Finance Discipline
utslib.copyright.status	closed_access
pubs.publication-status	Published	en_US
pubs.volume	25	en_US

Abstract:

© 2015 Elsevier Inc. Using a unique dataset we provide new evidence on the significant penalty on client fund performance due to conflicts of interest related to the cross trading (TCT) activities of mutual fund advisers: funds managed by advisers in the top TCT quintile significantly underperform funds managed by advisers in the bottom TCT quintile by 1% per year. Adviser incentives to engage in cross trading are directly related to their opportunities for generating revenues from affiliated trading operations. Additional tests suggest that the significantly higher trading commissions paid by client funds of high-TCT advisers are a major source of their under-performance.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/121974