... that the allowance of these complex instruments is associated with poor performance and higher risk. The underperformance is most acute during market downturns, and among mutual funds that are allowed to use derivatives. We also find that mutual funds underperform when they actually use complex instruments. Overall...

...Juan Carlos Matallín-Sáez We found a negative relation between mutual funds’ past R² and their abnormal performance, as did Amihud and Goyenko (2013), who proposed measuring active management of mutual funds by 1−R². The interpretation of this relationship...

...Edwin J. Elton; Martin J. Gruber; Andre de Souza Managers of Fund of Funds have access to information not available to the general public in evaluating funds from their own family. However, they may have family or self-serving motives that can hurt shareholder performance. By examining a history...