This paper studies the risk taking behavior between different mutual funds families and herding behavior within the same mutual fund families in Taiwan during the period from 2000 to 2004. Empirical results show that the families with consortium support tend to engage in more tournament behavior than those without the support of consortiums. The “year-end” compensation schemes of the foreign invested mutual fund families lead to relatively (compared to the stand-alone mutual fund families) clearer tournament behavior than within the bank affiliated, securities company affiliated, and financial holdings corporation affiliated mutual fund families. The return correlations and beta correlations reveal that the performance of funds inside a family is more similar than outside a family. This suggests that fund managers within the same mutual fund families exhibit herding behavior. Therefore, for the investors who confine their fund holdings to the same family, the diversifications effect will be reduced. Wise investors should diversify not only fund objectives but also fund families.