Strategic behavior of mutual funds

The research is devoted to the analysis of the agency problem in the mutual fund industry using the up-to-date database containing returns and flows of US mutual funds and UK unit trusts. The first section investigates the purchasing behavior of mutual fund investors. In particular the relationship between the funds' relative and absolute preformance and subsequent money flows in and out of the funds is explored. Special attention is paid to the exploration of the asymmetry in such a relationship. The second section examines whether mutual fund managers respond to present incentives by not acting in the interest of the shareholders. The third section asnalyses the influence of the ranking objectives on investment decisions by mutual fund managers.