NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Are Mutual Fund Managers Paid For Investment Skill?

Markus Ibert, Ron Kaniel, Stijn Van Nieuwerburgh, Roine Vestman

NBER Working Paper No. 23373
Issued in April 2017
NBER Program(s):AP, CF, LS

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 revenues and profits add substantial explanatory power for compensation to manager-level revenue and performance, highlighting the importance of the mutual fund firm.

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Document Object Identifier (DOI): 10.3386/w23373

 
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