Corporate Governance and Mutual Fund Performance

Mutual funds, or units trusts as they are better known in Singapore, is an investment tool commonly available to private and institutional investors.  The challenge for investors has always been to select funds worth putting one’s money in.  This has generally been based on a fund’s past performance relative to the benchmark index.

Assistant Professor Aurobindo Ghosh from SMU's Lee Kong Chian School of Business, and several SMU Finance faculty members, have undertaken research on the role of corporate governance in mutual fund performance.  They have proposed an objective data-driven corporate governance score.

Assistant Professor Ghosh and his coauthors produced a series of papers on how corporate governance scores can be used to enhance prediction of long-term performance of mutual funds.  One of the papers, titled Grades Matter in Performance: Morningstar Stewardship Grades and Mutual Fund Performance, won The Fund Management Prize at the Financial Markets and Corporate Governance Conference organised by Australia's Queensland University of Technology in Australia in April this year.

In this podcast, Professor Ghosh shares with us the key findings of the research, and its relevance to the man-in-the-street and the financial industry.