Born after the Volcker Rule: Regulatory change, managerial remuneration and hedge fund performance

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Abstract

Substantial remunerative benefits accrue to managers of new hedge funds launched after the implementation of the Volcker Rule if their previous employer is a large US bank. After the rule, ex‐bankers' funds charge higher management fees and receive more flows as compared with other new hedge funds established during the same period. This phenomenon is related to changes in investor perception of the distribution of skills of new fund managers rather than to the actual differences in skills. Ex‐bankers' funds are indistinguishable from other funds in terms of
performance, risk, and liquidation probability, both before and after the Volcker Rule.
Original languageEnglish
Number of pages40
JournalEuropean Financial Management
Early online date6 Sept 2023
DOIs
Publication statusE-pub ahead of print - 6 Sept 2023

Keywords

  • ex‐US LCFI bankers, fee structure, fund flows, hedge funds, Volcker Rule

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