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The effect of management team characteristics on risk‐taking and style extremity of mutual fund portfolios
Author(s) -
Karagiannidis Iordanis
Publication year - 2012
Publication title -
review of financial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.347
H-Index - 41
eISSN - 1873-5924
pISSN - 1058-3300
DOI - 10.1016/j.rfe.2012.06.009
Subject(s) - mutual fund , business , returns based style analysis , management styles , style (visual arts) , portfolio , investment management , diversity (politics) , manager of managers fund , investment style , target date fund , team composition , risk management , project portfolio management , finance , actuarial science , open end fund , economics , corporate governance , institutional investor , management , microeconomics , return on investment , project management , open ended investment company , archaeology , sociology , production (economics) , market liquidity , anthropology , history
This paper investigates the effect of management team‐level characteristics on portfolio risk and style extremity using a unique dataset of 1678 mutual fund managers. Results show that teams with more members, longer tenure, and more members with graduate business training hold less risky portfolios. The opposite is true for teams whose members engage in side‐by‐side management; that is, they manage multiple funds simultaneously. Member diversity is related to less extreme style decisions. These findings have important implications for fund management companies as they make decisions about the composition of management teams as well as for individual investors’ investment allocation decisions.