Finance

Business

Equity (law)

Stock (firearms)

Corporate governance

Macroeconomics

Engineering

Open-end fund

Political science

Economics

Assets under management

Divestment

Institutional investor

Asset management

Production (economics)

Fixed asset

Computer science

Financial system

Computer security

Asset (computer security)

Mechanical engineering

The Journal of Finance

ABSTRACT We study the performance of equity mutual funds run by asset management divisions of commercial banking groups using a worldwide sample. We show that bank‐affiliated funds underperform unaffiliated funds by 92 basis points per year. Consistent with conflicts of interest, the underperformance is more pronounced among those affiliated funds that overweight the stock of the bank's lending clients to a great extent. Divestitures of asset management divisions by banking groups support a causal interpretation of the results. Our findings suggest that affiliated fund managers support their lending divisions’ operations to reduce career concerns at the expense of fund investors.

Asset Management within Commercial Banking Groups: International Evidence