Yisong Tian (left),York alumnus and finance professor at York’s Schulich School of Business, is the co-winner of the third annual Barclays Global Investors Canada Research Award.
The research award is designed to recognize excellence in Canadian capital market research, and the winning paper is chosen by a panel of independent judges selected by the Canadian Investment Review journal.
Tian will share the $10,000 prize with co-author Scott Anderson of the School of Business Management at Ryerson University.
The winning paper, entitled “Incentive Fees, Valuation and Performance of Labour Sponsored Investment Funds”, examines manager compensation and the performance of labour-sponsored investment funds (LSIFs) in Canada. Tian and Anderson conclude that, despite the 30 per cent tax credit received by investors, most LSIFs are likely to be inferior to alternative investments such as mutual funds. Specific findings of the paper include:
- LSIFs have underperformed other investment funds and market indices
- Manager compensation is likely the major factor behind the poor performance
- Fees charged by LSIFs are substantially higher than by other investment funds and several elements of the fee structure are not in the best interests of investors
- The total cost of combined management and incentive fees far exceeds the benefit of the tax credit for most LSIFs
“This paper is of particular interest to Canadian investors,” says Gerry Rocchi (right), president and CEO of Barclays Global Investors Canada. “Labour-sponsored investment funds are a uniquely Canadian investment vehicle that have proved very popular with individual investors. This study provides important insights into the structure of manager compensation and its impact on investment performance and efficiency in the important area of providing capital for small and medium-sized companies.”
Tian received his MBA and, in 1992, his PhD in finance from York. He has published numerous papers in refereed academic journals including the Journal of Financial Economics, Journal of Financial and Quantitative Analysis, Journal of Banking and Finance, Financial Management, Journal of Derivatives, Applied Mathematical Finance, Journal of Futures Markets, Financial Review, and European Finance Review. He has also written a monograph and a textbook on derivative securities.
Tian has won several prestigious awards for his research, including the American Association of Individual Investors Best-Completed PhD Dissertation Award from the Financial Management Association, the 1994 Toronto Society of Financial Analysts Award for best research paper and the 2001 Best Conference Paper Award from the Northern Finance Association. His current teaching and research interests are in the area of derivatives, fixed income securities, investments management, and executive compensation.
Canadian Investment Review is a leading Canadian investment and finance journal for professional institutional investors.