Mode:

1. Create a "star" fund to attract capital inflows. Families with low ability are more likely to adopt the strategy of expanding the standard deviation of fund returns to build star funds;

2. Close the "star" fund and increase the inflow of funds from other family funds. Closed-end fund was originally used to protect the interests of investors, but considering the spillover effect of fund, it has become a means for fund companies to pursue their own profits;

3. Uneven distribution of resources within the family. The fund family does not allocate resources according to the fund demand, but according to the fund performance, and increases the capital flow of the whole family by improving the performance of some funds.

Impact:

Impact on fund managers: Individual fund managers will take corresponding decisions to maximize their profits.

Impact on fund investors: The fund cross-subsidy strategy distorts the incentive to fund managers, which leads to the fund managers violating the requirements of maximizing the interests of fund investors in the fiduciary responsibility.