No. 1272 - Mutual funds' performance: the role of distribution networks and bank affiliation

This paper studies the return differential between mutual funds issued by bank-affiliated asset management companies (AMCs) and those issued by independent AMCs in the period from 2006-17. We analyze the effects of the distribution network characteristics and of the affiliation to a banking group on the return differential between the two types of mutual funds.

The underperformance of funds issued by bank-affiliated AMCs is mostly explained by the bank-centric structure of the distribution network and, to a lesser extent, by investment strategies that are biased towards securities issued by lending clients of the AMC banking group and by institutions affiliated to the same group.