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Mutual Fund Managers’ Prior Work Experience and Their Investment Skill

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  • Rui Chen
  • Zhennan Gao
  • Xueyong Zhang
  • Min Zhu

Abstract

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.

Suggested Citation

  • Rui Chen & Zhennan Gao & Xueyong Zhang & Min Zhu, 2018. "Mutual Fund Managers’ Prior Work Experience and Their Investment Skill," Financial Management, Financial Management Association International, vol. 47(1), pages 3-24, March.
    • Handle: RePEc:bla:finmgt:v:47:y:2018:i:1:p:3-24
    DOI: 10.1111/fima.12180
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    References listed on IDEAS

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    Cited by:

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    3. Zhang, Wei & Li, Yi, 2021. "Do visiting monks give better sermons? An analysis of the foreign experience of Chinese fund managers," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 75(C).
    4. Zheng, Yao & Osmer, Eric & Bai, Yidan, 2021. "Timing market confidence in the Chinese domestic security market," The Quarterly Review of Economics and Finance, Elsevier, vol. 82(C), pages 298-311.
    5. Yu, Bin & Shen, Yifan & Jin, Xuejun & Xu, Qi, 2022. "Does prospect theory explain mutual fund performance? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 73(C).
    6. Jordan, Bradford D. & Li, Ang & Liu, Mark H., 2022. "Mutual fund preference for pure-play firms," Journal of Financial Markets, Elsevier, vol. 61(C).
    7. Yaping Xiao & Haishu Qiao & Ting Xie, 2019. "Open-End Funds for Sustainable Economic Growth in China: The Relationship between Load Fees, Performance, and Flows," Sustainability, MDPI, vol. 11(22), pages 1-27, November.
    8. Zhang, Ning & Zhang, Yue & Zong, Zhe, 2023. "Fund ESG performance and downside risk: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 86(C).
    9. Betzer, André & Limbach, Peter & Rau, P. Raghavendra & Schürmann, Henrik, 2021. "Till death (or divorce) do us part: Early-life family disruption and investment behavior," Journal of Banking & Finance, Elsevier, vol. 124(C).
    10. Wang, Yang & Ashton, John K. & Jaafar, Aziz, 2019. "Does mutual fund investment influence accounting fraud?," Emerging Markets Review, Elsevier, vol. 38(C), pages 142-158.
    11. Huang, Ying Sophie & Liang, Bing & Wu, Kai, 2021. "Are mutual fund manager skills transferable to private funds?," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 614-638.
    12. Luo, Deming & Yao, Zhongwei & Zhu, Yanjian, 2022. "Bubble-crash experience and investment styles of mutual fund managers," Journal of Corporate Finance, Elsevier, vol. 76(C).

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