Price support by bank-affiliated mutual funds

Dual ownership, returns, and voting in mergers

“…Though the aggregate effect of coordination within financial groups is likely to be positive, bond funds' investors benefit at the expense of equity funds' investors, which potentially constitutes a breach of fiduciary duties by fund managers. This is consistent with the recent findings by Golez and Marin (2015) which shows that affiliated mutual funds can engage in suboptimal portfolio allocation if it benefits their parent holding company.…”

Is Proprietary Trading Detrimental to Retail Investors?

“…Second, if a bank offers discretionary portfolio management services to its clients, the bank's portfolios managers can buy stocks directly into managed individual client portfolios without explicit client consent. The final channel is relevant for banks with affiliated mutual funds, as motivated by the findings of previous literature on information sharing and interactions between the portfolio holdings of banks and their affiliated mutual funds (e.g., Massa and Rehman (), Golez and Marin ()). Note that the remuneration of client relationship and fund managers at (German) banks is based predominantly on the volume of assets under management rather than on portfolio performance (Deli (), Del Guercio, Genc, and Tran ()).…”

Fire sales by euro area banks and funds: What is their asset price impact?

“…These interlinkages can operate in favour or against stability. On the one hand, funds may support their parent institutions by investing in them during difficult times (Golez and Marin, 2015). 4 On the other hand, the parent entity's risk may spread directly to its subsidiaries.…”