TY - JOUR
T1 - Mutual fund objective misclassification
AU - Kim, Moon
AU - Shukla, Ravi
AU - Tomas, Michael
N1 - Funding Information:
We are grateful to an anonymous referee for numerous suggestions that have improved the paper significantly. We also thank Sherman Chottiner, Fernando Diz, Paul DuFlo, Amy Morgan and Greg van Inwegen for insightful discussion and helpful comments. This research is partially supported by a summer research grant from the office of the Research and Computing of Syracuse University.
PY - 2000
Y1 - 2000
N2 - Mutual funds are usually classified based on their stated objectives. If the stated objectives are not the actual objectives the funds pursue, conclusions drawn by investors and researchers based on the stated objectives will be misleading. This study classifies funds based on their attributes (characteristics, investment style, and risk/return measures). We find that the stated objectives of more than half the funds differ from their attributes-based objectives, and over one third of the funds are severely misclassified. However, contrary to the reports in the financial press, we do not find that mutual funds are gaming their objectives, i.e., deviating from their stated objectives to earn a higher relative performance ranking.
AB - Mutual funds are usually classified based on their stated objectives. If the stated objectives are not the actual objectives the funds pursue, conclusions drawn by investors and researchers based on the stated objectives will be misleading. This study classifies funds based on their attributes (characteristics, investment style, and risk/return measures). We find that the stated objectives of more than half the funds differ from their attributes-based objectives, and over one third of the funds are severely misclassified. However, contrary to the reports in the financial press, we do not find that mutual funds are gaming their objectives, i.e., deviating from their stated objectives to earn a higher relative performance ranking.
KW - Investment objectives
KW - Mutual funds
UR - http://www.scopus.com/inward/record.url?scp=15944365561&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=15944365561&partnerID=8YFLogxK
U2 - 10.1016/s0148-6195(00)00022-9
DO - 10.1016/s0148-6195(00)00022-9
M3 - Article
AN - SCOPUS:15944365561
SN - 0012-9933
VL - 52
SP - 309
EP - 323
JO - Journal of Economics and Business
JF - Journal of Economics and Business
IS - 4
ER -