TY  - JOUR
AU  - Reuter,Jonathan
AU  - Zitzewitz,Eric
TI  - How Much Does Size Erode Mutual Fund Performance? A Regression Discontinuity Approach
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 16329
PY  - 2010
Y2  - September 2010
UR  - http://www.nber.org/papers/w16329
L1  - http://www.nber.org/papers/w16329.pdf
N1  - Author contact info:
Jonathan Reuter
Carroll School of Management
Boston College
224B Fulton Hall
140 Commonwealth Avenue
Chestnut Hill, MA 02467
Tel: 617/552-2863
Fax: 617/552-0431
E-Mail: reuterj@bc.edu

Eric Zitzewitz
Department of Economics
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-2891
Fax: 603/646-2122
E-Mail: eric.zitzewitz@dartmouth.edu
AB  - Although mutual funds exhibit little ability to persistently outperform their peers, money flows into funds with the highest past returns. Berk and Green (2004) rationalize these patterns by arguing that more-skilled managers manage more assets but, because of diseconomies of scale, generate the same expected returns as less-skilled managers. To identify the causal impact of fund size on performance, we exploit the fact that small differences in mutual fund returns can cause discrete changes in Morningstar ratings that, in turn, generate discrete differences in mutual fund size. Our regression discontinuity estimates yield little evidence that fund size erodes fund returns.
ER  -