Outsourcing in the international mutual fund industry: : An equilibrium view

• Autores: Oleg Chuprinin, Massimo Massa, David Schumacher
• Localización: The Journal of finance, ISSN 0022-1082, Vol. 70, Nº 5, 2015, págs. 2275-2308
• Idioma: inglés
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• Resumen

  • We study outsourcing relationships among international asset management firms. We find that, in companies that manage both outsourced and in-house funds, in-house funds outperform outsourced funds by 0.85% annually (57% of the expense ratio). We attribute this result to preferential treatment of in-house funds via the preferential allocation of IPOs, trading opportunities, and cross-trades, especially at times when in-house funds face steep outflows and require liquidity. We explain preferential treatment with agency problems: it increases with the subcontractor's market power and the difficulty of monitoring the subcontractor, and decreases with the subcontractor's amount of parallel in-house activity