This paper provides a selective review of the theoretical literature on delegated portfolio
management as a principal–agent relationship. The main focus of the paper is to review the …

Using a comprehensive hedge fund database, we examine the role of managerial incentives
and discretion in hedge fund performance. Hedge funds with greater managerial incentives …

This paper examines the effect of incentive fees on the behavior of mutual fund managers.
Funds with incentive fees exhibit positive stock selection ability, but a beta less than one …

We study compensation contracts of individual portfolio managers using hand‐collected
data of over 4,500 US mutual funds. Variations in the compensation structures are broadly …

We argue that active management's popularity is not puzzling despite the industry's poor
track record. Our explanation features decreasing returns to scale: As the industry's size …

This paper analyzes the asset pricing implications of commonly used portfolio management
contracts linking the compensation of fund managers to the excess return of the managed …

We model asset management as a continuum between active and passive: managers can
deviate from benchmark indices to exploit noise trader–induced distortions, but agency …

Recently, there has been rapid growth in the assets managed by “hedged mutual funds”—
mutual funds mimicking hedge fund strategies. We examine the performance of these funds …

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 …

Many investors confine their mutual fund holdings to a single fund family either for simplicity
or through restrictions placed by their retirement savings plan. We find evidence that mutual …