Asset (and Data) Managers

This paper studies the direct impact of new technologies on the asset management industry. I show that technological innovations substantially improve fund managers’ ability to target product demand and attract capital inflows, with implications for the industry’s structure. Exploiting information from their websites’ codes, I track when fund managers start collecting  and analyzing customers’ data using tools like Google Analytics or A/B testing.  Funds adopting such technologies attract 1.5% higher annual flows and charge higher fees, with no improvement in performance. Results are concentrated in retail share classes and do not hold on placebo technologies. Additionally, funds expand product offerings and the effects decrease with competition, as more funds within the same fund-category adopt similar technologies. Overall, these results show that fund managers extract more value from financial markets after adopting data technologies –without sharing it with their own investors. This evidence highlights  that technological innovation in asset management extends beyond portfolio allocation decisions to impact how funds attract and retain capital.