Mutual Fund Performance Persistence and Competition: A Cross-Sector Analysis
Posted: 20 Jun 2005
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Mutual Fund Performance Persistence and Competition: A Cross-Sector Analysis
Abstract
Existing work on mutual fund performance persistence obtains diverse results, depending on the group of funds studied. We examine whether performance persistence within a peer group of competing mutual funds depends on the group's composition. The UK mutual fund industry is ideal for such an examination because funds compete within strictly defined sectors. We consider several attributes related to the intensity of competition within a sector and use them to explain sector-level persistence. We find robust evidence that persistence is higher in sectors where concentration of assets under management is higher.
Keywords: Mutual funds, performance persistence, competition
JEL Classification: G23
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