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Mutual Fund Managers’ Prior Work Experience and Their Investment Skill
Author(s) -
Chen Rui,
Gao Zhennan,
Zhang Xueyong,
Zhu Min
Publication year - 2017
Publication title -
financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.647
H-Index - 68
eISSN - 1755-053X
pISSN - 0046-3892
DOI - 10.1111/fima.12180
Subject(s) - manager of managers fund , mutual fund , luck , business , portfolio , investment management , work (physics) , target date fund , stock (firearms) , fund administration , closed end fund , finance , investment fund , accounting , open end fund , institutional investor , corporate governance , mechanical engineering , philosophy , theology , market liquidity , engineering
This paper examines the relationship between mutual fund managers’ past professional backgrounds and their portfolio performance using Chinese mutual fund data from 2003 to 2016. We focus on managers with prior work experience either as industry analysts or as macroanalysts. We hypothesize that managers who worked as industry analysts exhibit superior stock picking skills, while managers with a background as macroanalysts time the market better. These hypotheses are supported by the data after controlling for observable fund and manager characteristics. Bootstrap analyses suggest that a significant difference in performance between these two types of managers cannot be attributed purely to luck.