Alka Bramhandkar

“Emerging” vs. “Developed” markets closed‐end funds: a comparative performance analysis

This study examines the fund‐level correlates of return and share price discount or premium for the closed end funds (CEFs) investing in emerging and developed capital markets. It also compares the performance of CEFs investing in emerging markets with similar types of funds that invested in the developed markets, especially significant in light of recent economic crises experienced by a number of such emerging economies and their ripple (contagion) effects felt in other emerging or developed capital markets. Lastly, as emerging markets constitute a wide array of countries with very different economic records, this paper looks into the performance of emerging markets CEFs by region as well as the performance of single‐country versus regional funds. Findings confirmed results of many studies of domestic and international open‐ or closed‐end funds on determinants of return and share price discount or premium. Emerging capital markets also continued to provide an outlet for international investors to improve their portfolio return despite significant volatility that surrounded them during the study period. Lastly, this study did not find any compelling evidence for consistent superior performance by CEFs investing in any particular region or country within the emerging markets.

A case study of ethics and mutual funds mismanagement at Putnam

This case study examines the failure of top management at Putnam to exercise ethical behavior in the face of their clear knowledge of corruption in the company. Market timing by employees was expressly forbidden by Putnam. Six employees, including two portfolio managers, repeatedly engaged in market timing activities from 1998 to 2003, garnering over a million dollars in personal profit. The CEO and key senior executives had factual knowledge of the abuses. Management failed to stop the abuses or to discipline those involved until faced with charges from government regulators. By failing to do so, top management breached ethical duties to its shareholders and inflicted serious damage on the organization. The end results of top managements failure to address ethical violations were significant outflow of assets from Putnams funds, payment of penalties, and loss of trust among investors. This case raises awareness about ethical issues surrounding mutual fund trading practices and the impact that top management can have on the ethical behavior of employees.