Journal of Financial and Quantitative Analysis

Research Article

The Determinants of the Flow of Funds of Managed Portfolios: Mutual Funds vs. Pension Funds

Diane Del Guercioa1 and Paula A. Tkaca2

a1, Lundquist College of Business, University of Oregon, Eugene, OR 97403

a2, Research Department, Federal Reserve Bank of Atlanta, 1000 Peachtree St. NE, Atlanta, GA 30309.


This study compares the relations between asset flow and performance in the retail mutual fund and fiduciary pension fund segments of the money management industry, and relate empirical differences to fundamental differences in the clientele they serve. A striking difference is the shape of the flow-performance relation. In contrast to mutual fund investors, pension clients punish poorly performing managers by withdrawing assets under management and do not flock disproportionately to recent winners. We interpret these and other empirical differences in the context of the manager evaluation procedures typical in each segment. We conclude that pension managers have little incentive to engage in the risk-shifting behavior previously identified among mutual fund managers.