# Mutual funds `kaal:entity:mutual-funds` **Status.** derived This node is assembled mechanically from the 11 claims that carry the concept tag `mutual-funds`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself. ## Every claim under this term 11 claims across 5 works, 2016 to 2017. **2016** - [2714974-023](https://wulfkaal.github.io/claims/2714974-023) [mechanism/argued] -- Hedge funds retain a structural short selling advantage because they are unaffected by the restrictions imposed on mutual funds, can use derivatives to avoid margin requirements, and have pioneered procedures that lower the direct costs of shorting. > Hedge funds are unaffected by the restrictions on mutual funds, can use derivatives to avoid the margin requirements, and pioneered procedures that reduce the direct costs of shorting. Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974 - [2714974-036](https://wulfkaal.github.io/claims/2714974-036) [mechanism/argued] -- The combined restrictions on registered investment company short selling, leverage, and organizational structure create a substantial disincentive for such companies to pursue absolute return strategies that are independent of the aggregate value of the market. > The restrictions on investment company short selling, leverage, and organizational structure create a substantial disincentive for such companies to engage in so-called absolute return investment strategies, which are strategies that are independent of the aggregate value of the market. Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974 - [2714974-037](https://wulfkaal.github.io/claims/2714974-037) [mechanism/argued] -- The prohibition on performance fees for investment companies is the most important structural difference from hedge funds, which rely heavily on performance fees of up to 20 percent of capital gains and appreciation to give advisers incentives to produce absolute returns. > Most importantly, investment advisers to investment companies may not charge an investment company a performance fee. Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974 - [2715083-001](https://wulfkaal.github.io/claims/2715083-001) [definitional/argued] -- Confluence between mutual and hedge funds runs in two directions at once: mutual funds are converging on hedge funds along the dimension of investment strategy, while hedge funds are converging on mutual funds along the dimension of regulation. > Mutual funds are becoming more like hedge funds as a matter of investment strategy while hedge funds are becoming more like mutual funds as a matter of the regulatory framework. Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083 - [2715083-010](https://wulfkaal.github.io/claims/2715083-010) [mechanism/argued] -- Operating a mutual fund is materially more capital intensive than operating a hedge fund: the mutual fund adviser's required investment in trading and operational technology and in specialized staffing substantially exceeds what a hedge fund manager must spend. > the size of the investment in trading and operational technology and in experienced portfolio management, trading, reporting, operational, risk management, and other staffing incurred by a mutual fund adviser is materially larger than what a hedge fund manager must expend to operate its business. Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083 - [2715083-038](https://wulfkaal.github.io/claims/2715083-038) [mechanism/argued] -- Rising demand for alternative strategies creates incentives for mutual fund managers to find ways to simulate leverage, in an industry that historically used little leverage and presented little risk. > while mutual funds have historically used little leverage (or leverage-creating derivatives) and presented little risk, the increasing demand for alternative strategies (Kaal & Anderson 2016) creates incentives for mutual fund managers to seek ways to simulate leverage. Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083 - [2715083-039](https://wulfkaal.github.io/claims/2715083-039) [predictive/speculative] -- The mutual fund industry of the future could carry more risk than its historical averages suggest, a possibility with systemic implications given the comparative size of the mutual fund market. > Given this trend, it seems at least possible that the mutual fund industry of the future could be subjected to more risk than the historical averages suggested in the past. Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083 - [2739479-016](https://wulfkaal.github.io/claims/2739479-016) [mechanism/argued] -- The traditional distinction between mutual funds and private funds is dissipating: mutual funds are becoming more like hedge funds in investment strategy, while hedge funds are becoming more like mutual funds in regulatory framework. > Several factors suggest that mutual funds are becoming more like hedge funds as a matter of investment strategy, while hedge funds are becoming more like mutual funds as a matter of regulatory framework. Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479 - [2811718-037](https://wulfkaal.github.io/claims/2811718-037) [mechanism/argued] -- Lacking standards for private fund investor due diligence can partly be attributed to private funds' unique market position: unlike mutual funds, private funds evolved as unregistered entities free from most regulatory oversight, so their due diligence evolved without regulatory oversight as well. > Lacking standards for private fund IDD can partially be attributed to private funds' unique position in markets. Unlike mutual funds, private funds evolved as unregistered entities, free from most regulatory oversight. Accordingly, the private fund IDD evolved without regulatory oversight. Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718 **2017** - [2998097-031](https://wulfkaal.github.io/claims/2998097-031) [mechanism/argued] -- The absence of due diligence standards traces to private funds' unique market position: unlike mutual funds, private funds evolved as unregistered entities free from most regulatory oversight, so their investor due diligence also evolved without oversight. > Lack of standards for private fund investor due diligence could partially be attributed to private funds' unique position in markets—unlike mutual funds, private funds evolved as unregistered entities, free from most regulatory oversight. Accordingly, private fund investor due diligence evolved Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097 - [2998097-033](https://wulfkaal.github.io/claims/2998097-033) [mechanism/argued] -- Confluence runs in both directions: mutual funds are becoming more like hedge funds as a matter of investment strategy, while hedge funds are becoming more like mutual funds as a matter of regulatory framework. > Several factors suggest that mutual funds are becoming more like hedge funds as a matter of investment strategy, while hedge funds are becoming more like mutual funds as a matter of the regulatory framework.169 The factors that perhaps best illustrate the Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097 ## Verify Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust. curl -s https://wulfkaal.github.io/entities/mutual-funds.md | sha256sum **Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.