Abstract

The mutual fund industry has grown rapidly during the past decade. In the U.S., each mutual fund that is registered with the Securities and Exchange Commission (SEC) is required to be overseen by a board of directors or board of trustees. They oversee the fund’s compliance program, negotiate the fees paid for the advisors and supervise the fund performance. They manage the funds on behalf of the shareholders and is a bridge between shareholders and fund managers. So what composes a good mutual fund board? Besides fund managers’ day-to-day running, could the composition and structure of the board impact fund performance? Using a large sample of open-end mutual funds, and three corresponding manually-collected databases of board of directors for 2009, 2011 and 2013, we examine whether the average board composition and diversity characteristics have an explanatory power of fund performance. We find that none of these tested characteristics is a consistently significant determinant of relative cross-sectional performance.