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Professor A. Joseph Warburton Co-authors “Mutual Funds that Borrow” Illustrating the Risks to Investors of this Practice

Posted on Tuesday 1/21/2020
Professor A. Joseph Warburton

Professor A. Joseph Warburton, Professor of Law and Professor of Finance at the Whitman School of Management, has co-authored the paper “Mutual Funds that Borrow” with Professor Michael Simkovic, Professor of Law and Accounting, at the USC Gould School of Law, in the Journal of Empirical Legal Studies

Millions of Americans rely on mutual fund investments to pay for their retirement, but mutual funds contain hidden, previously under-appreciated risks. The new study, forthcoming in the Journal of Empirical Legal Studies, provides evidence that mutual funds borrow in an attempt to improve their performance. But those attempts not only fail to boost average returns, but they also increase the volatility of returns, potentially creating serious problems for those who need to withdraw their money at a time when the market is down.

Download the article here.

Read more on the Harvard Law School Forum on Corporate Governance.