On the performance of Bank-managed mutual funds: Canadian evidence

Commercial bank involvement in the mutual fund industry has been growing globally for the last few decades. General perception of the performance of these bank-managed funds has been negative. Academic studies of the issue have had varying results. This paper examines the issue in Canada where bank and independent funds have similar overall market shares and thus market power is not an issue. Our results show that after properly accounting for double-clustering, risk-adjusted returns are not significantly different between the two groups. Systematic risk, however, is different for equity funds but not for bond or balanced funds. These findings will be useful for both regulators and individual investors.