Discussion paper
DP18565 Benefits of Partial vs Full Mandatory Mutual Fund Disclosure
We study implications of partial versus full disclosure requirements on mutual fund trading and performance, by exploiting a unique hybrid disclosure policy in China, requiring full disclosure at a semi-annual frequency, but only disclosure of top-10 holdings at other quarters. Under partial disclosure, funds benefit from strategically concealing private information. Fund holdings outperform those under full disclosure by 3% over the following three months. Partial disclosure reduces window dressing distortions, doesn’t deteriorate market liquidity nor fund portfolios’ risk profiles. Together, the evidence suggests that not only a disclosure requirement, but its extent, is an important dimension of policy to consider.
£6.00
