Risk Taking by Mutual Funds as a Response to Incentives

This paper examines the agency conflict between mutual fund investors and mutual fund companies. Investors would like the fund company to use its judgement to maximize risk-adjusted fund returns. A fund company, however, in its desire to maximize its value as a concern has an incentive to take actions which increase the inflow of investment. We use a semiparametric model to estimate the shape of the flow-performance relationship for a sample of growth and growth and income funds observed over the 1982-1992 period. The shape of the flow-performance relationship creates incentives for fund managers to increase or decrease the riskiness of the fund which are dependent on the fund's year-to-date return. Using a new dataset of mutual fund portfolios which includes equity portfolio holdings for September and December of the same year, we show that mutual funds do alter their portfolio riskiness between September and December in a manner consistent with these risk incentives.

Supernova Remnant Evolution in Wind Bubbles: A Closer Look at Kes 27

Massive Stars (> 8 solar masses) lose mass in the form of strong winds. These winds accumulate around the star, forming wind-blown bubbles. When the star explodes as a supernova (SN), the resulting shock wave expands within this wind-blown bubble, rather than the interstellar medium. The properties of the resulting remnant, its dynamics and kinematics, the morphology, and the resulting evolution, are shaped by the structure and properties of the wind-blown bubble. In this article we focus on Kes 27, a supernova remnant (SNR) that has been proposed by Chen et al (2008) to be evolving in a wind-blown bubble, explore its properties, and investigate whether the properties could be ascribed to evolution of a SNR in a wind-blown bubble. Our initial model does not support this conclusion, due to the fact that the reflected shock is expanding into much lower densities.Comment: 5 pages, 3 figures. Revised version submitted to High Energy Density Physics. To be published in a special issue of the proceedings of the 2012 HEDLA conferenc