The associate professors of finance document the recent rise in the side-by-side management of mutual funds and actively managed exchange traded funds.
Adam Aiken and Kate Upton, both associate professors of finance in the Martha and Spencer Love School of Business, co-authored “Side-by-side management of mutual funds and actively managed exchange traded funds,” which is published in The Financial Review.
The professors, along with co-author Eli Sherrill, associate professor of finance at Illinois State University, focus on how the mutual fund family makes the decision to open a side-by-side (SBS) management of mutual funds and actively managed exchange traded funds (AMETFs), as well as how the SBS relationship shapes the incentives faced by mutual fund managers, the impact this has on fund returns, and the subsequent reaction of their investors.
“We document the recent rise in the side-by-side (SBS) management of mutual funds and actively managed ETFs (AMETFs),” the authors wrote in the paper’s abstract. “Although these funds are run in a SBS manner, only 21% share an investment objective code. This relationship is started by families with more ETF experience and is not used to reward “star” managers. On average, mutual funds with SBS AMETFs perform similarly to comparable funds after SBS formation; however, their flows fall when pairs share the same investment objective. We find evidence of both a substitution effect and conflicts of interest between SBS funds, depending on the contracting and organizational structures.”
Aiken joined Elon in 2015 after receiving a doctorate in finance from Arizona State University. His research interests include financial institutions and performance measurement, with a particular focus on hedge funds. In 2020, he was named a “Top 50 Undergraduate Business Professor” by Poets&Quants.
After earning her doctorate in finance from the University of Alabama in 2014, Upton joined Elon, where she also holds the position of director of the William Garrard Reed Finance Center. Her research interests include corporate finance-capital structure with a focus on debt heterogeneity, and investments, specifically hedge funds, mutual funds and corporate bonds. She is the 2021 recipient of Elon’s Steven and Patricia House Excellence in Mentoring Award.