Discussion paper

DP12241 Are Mutual Fund Managers Paid For Investment Skill?

Compensation of mutual fund managers is paramount to understanding agency frictions in asset delegation. We collect a unique registry-based dataset on the compensation of Swedish mutual fund managers. We find a concave relationship between pay and revenue, in contrast to how investors compensate the fund company (firm). We also find a surprisingly weak sensitivity of pay to performance, even after accounting for the indirect effects of performance on revenue. Firm-level fixed effects, revenues, and profits add substantial explanatory power for compensation.

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Citation

Kaniel, R, M Ibert, S Van Nieuwerburgh and R Vestman (2017), ‘DP12241 Are Mutual Fund Managers Paid For Investment Skill?‘, CEPR Discussion Paper No. 12241. CEPR Press, Paris & London. https://cepr.org/publications/dp12241