Team-Managed Mutual Funds: Outsmarting the Market with Flow Dynamics

Abstract: This study examines mutual fund performance, focusing on organizational structure impact. It compares team-managed and individually managed funds during capital flows. The findings indicate that team-managed funds have a competitive advantage in navigating the challenges posed by redemptions, demonstrating a superior ability to make trading decisions that preserve and enhance performance. Conversely, team-managed funds face difficulties in capitalizing on new subscriptions during inflow periods, encountering challenges in expanding their portfolios and making informed investment choices. Investors should monitor team-managed funds during inflows to address agency issues. Team composition, particularly size and experience, influences competitiveness, though diversity and interconnectedness may hinder portfolio growth.

Keywords: Mutual funds, flow dynamics, performance predictability, team characteristics