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Are specialist funds “special”?
Author(s) -
Fricke Daniel
Publication year - 2018
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.12257
Subject(s) - fund of funds , portfolio , equity (law) , business , global assets under management , passive management , institutional investor , commodity pool , finance , actuarial science , political science , corporate governance , market liquidity , law
In this paper, I explore the relation between portfolio overlap and performance diversity. Using data on actively managed U.S. equity mutual funds, I find that the pairwise portfolio overlap between individual funds has increased over time and is significant compared to various randomized benchmarks. These findings motivate the main question of this paper, namely whether specialist funds (those with low levels of portfolio overlap with other funds) differ significantly from funds with high levels of overlap. Here, I find that these specialists differ with regard to certain portfolio‐ and fund‐specific characteristics, but they do not appear to outperform other funds.