Investigating Motivations Risk shift Mutual Funds Managers in Bullish and Bearish Market And its Impact on Return

Abstract

The incentives of fund managers and their superior capabilities in order to invest and manage them are two explanations for the risk changes of joint venture funds in different market conditions. To this end, in this research, through the analysis of 21 mutual funds in stock for the period of 79 months from August 2011 to March 2018, using the least squares method, we examine the incentives for risk managers of mutual funds in the stock and its effect on return on investment. The results of the research show that in the bull markets, there is a motivation to compensate for losses, as managers of these funds increase the level of risk in the future, Causing increase the returns of the funds Future period. Against the managers of winning funds, using the exhibit superior investment ability, reduce the risk of fund and increase the returns of the Future period.According to the results, In bearish markets, managers will reduce their future returns by increasing the risk of the fund, which reflects the organizational weakness or weakness of the managers' skills in investing. In contrast managers who reduce the risk level of the fund seek to increase the return on the fund's future period, which is motivated by the managers' career concerns.

Keywords

• compensation incentives
• career concerns
• risk shifting
• managerial skills
• bullish and bearish market