Although the fund industry has experienced rapid growth in recent years, structural problems remain widespread. In particular, the proliferation of small-scale funds—driven by asset management companies' practice of excessively launching new products to expand fund demand and investors' short-term investment tendencies—has resulted in a situation where the number of funds is large but their sizes are small, making inefficient operations by asset management companies inevitable. Consequently, concerns have been raised about the possibility of performance management bias, whereby asset management companies differentiate their performance management efforts according to their own benefits. This study aims to investigate this phenomenon. First, funds expected to receive greater performance management attention from asset management companies due to their higher benefits in terms of fund size and growth potential were classified as PM Funds (Performance Managed Funds), while the remaining funds were classified as NPM Funds (Non-Performance Managed Funds). Empirical analysis revealed that PM Funds realized abnormal returns through fund managers' stock selection ability, whereas NPM Funds failed to realize abnormal returns because fund managers' stock selection ability was not exercised even when their discretionary authority was expanded. This suggests a transfer of fund managers' management capabilities from NPM Funds to PM Funds. Meanwhile, domestic fund managers' market timing ability did not serve as a differentiating factor between the two fund groups' performance. Furthermore, the intensive performance management of PM Funds by asset management companies was confirmed to generate additional capital inflow effects. Therefore, it is concluded that domestic asset management companies' performance management bias—concentrating performance management capabilities on PM Funds with greater benefits—disturbs domestic fund investors' investment decision-making while simultaneously exacerbating information asymmetry between asset management companies and investors.