We define benchmark drift based on changes in a fund's beta relative to its self-promoted benchmark, calculated from the portfolio holdings of both the fund and benchmark. Benchmark drift has a strong adverse impact on mutual fund flows, even when funds beat the benchmark. Moreover, controlling...

Evidence indicates that private equity funds, unlike mutual funds, deliver persistent abnormal returns and that the top performing funds are often oversubscribed. Why do private equity funds appear to leave money on the table, rather than increasing fund size? We argue that private equity funds...