Management Compensation and the Performance of Mutual Funds

This paper examines the mutual fund market as a market for the sale of management services using an unbalanced panel of 860 US equity funds over the 1976-1993 period. From among the performance measures for which investors have the necessary information to compute, we find that the Jensen measure best explains the change in market shares over time. It is found, however, that investors actually value the systematic component of risk more than indicated by the use of Jensen's performance measure. Our results also suggest that investors in load funds are less responsive to both components of performance (risk and return) than are investors in no-load funds. Investors, moreover, value recent past performance differently for funds with different attributes. An important result of the paper relating to the incentives provided with the widely used fixed-fee compensation schemes is that past fund performance influences individual investment decisions and hence future net asset values of funds, implying strong incentives for managers to increase their performance and by doing so, their compensation.

Ownership, Risk and Performance of Mutual Fund Management Companies

This paper compares the performance of mutual funds managed by publicly-traded management companies with those managed by private management companies. We find that publicly-traded management companies invest in riskier assets and charge higher management fees than do the funds managed by private management companies. The risk-adjusted returns of the mutual funds managed by publicly-traded management companies are also lower than those of the mutual funds managed by private management companies. This finding is consistent with both a risk spreading and agency cost argument. The paper also shows that the idiosyncratic risk of the publicly-traded management company's stock significantly differs from the idiosyncratic risk of the assets they manage, suggesting that previous research using the stock's idiosyncratic risk as a proxy for the idiosyncratic risk of the company's assets to study the determinants of publicly-traded companies' ownership concentration may be misleading.

The Determinants of Management Expenses

This paper develops a model which explains the determinants of the management expenses charged by U.S. equity funds. The study shows that for high quality managers, an increase in quality is associated with higher fees. In contrast, as the quality of the lower quality managers deteriorates, their fees increase. A non-linear negative relationship is found between the size of a fund and its management expenses. Economies of scope are also shown to exist between the number of funds within a mutual fund complex and the management expenses charged investors. Finally, while 12b-1 fees have been thought of as a substitute for load charges, this paper suggests that they are complements.

Introduction: Continuing disruptions, new beginnings

Despite the difficult, unprecedented circumstances of this past year, the Jewish Historical Society of England, and its annual, Jewish Historical Studies: Transactions of the JHSE (the issue before you, either virtually or hard-copy), move ahead. Under the leadership of chairperson Caroline Maurice, as chief administrator, and Miri Rubin, the President providing overall and scholarly guidance, the Society continues to attract new members and to launch new programmes to ensure the longevity and vitality of the organization. Its journal, too, is in a course of change and progress. In the next few years it will be turned over to a group of three editors – Shirli Gilbert, Adam Mendelsohn, and Avril Alba – who will expand the remit from England (which has, though, typically included Wales, Scotland, Northern Ireland, and Ireland), with deliberate speed, to the historical British empire and Jewry in the English-speaking world writ large. More detailed illumination of this transition will appear in forthcoming issue

Data Flow Maps—Increasing Data Processing Transparency and Privacy Compliance in the Enterprise

In recent years, well-known cyber breaches have placed growing pressure on organizations to implement proper privacy and data protection standards. Attacks involving the theft of employee and customer personal information have damaged the reputations of well-known brands, resulting in significant financial costs. As a result, governments across the globe are actively examining and strengthening laws to better protect the personal data of its citizens. The General Data Protection Regulation (GDPR) updates European privacy law with an array of provisions that better protect consumers and require organizations to focus on accounting for privacy in their business processes through “privacy-by-design” and “privacy by default” principles. In the US, the National Privacy Research Strategy (NPRS), makes several recommendations that reinforce the need for organizations to better protect data. In response to these rapid developments in privacy compliance, data flow mapping has emerged as a valuable tool. Data flow mapping depicts the flow of data through a system or process, enumerating specific data elements handled, while identifying the risks at different stages of the data lifecycle. This Article explains the critical features of a data flow map and discusses how mapping may improve the transparency of the data lifecycle, while recognizing the limitations in building out data flow maps and the difficulties of maintaining updated maps. The Article then explores how data flow mapping may support data collection, transfer, storage, and destruction practices pursuant to various privacy regulations. Finally, a hypothetical case study is presented to show how data flow mapping was used by an organization to stay compliant with privacy rules and to improve the transparency of information flows