The Appeal of Risky Assets
b"A fund's performance is usually compared to the performance of an index or other\\nfunds. If a fund trails the benchmark, the fund manager is often replaced. We argue\\nthat this may lead to excessive risk-taking if fund managers differ in ability and have\\nthe opportunity to take excessive risk. To match the benchmark, fund managers may\\nincrease the risk of their portfolio even if this decreases the expected return on the\\nportfolio."