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The investment abilities of mutual fund buy-side analysts

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  • Cici, Gjergji
  • Rosenfeld, Claire

Abstract

We investigate the abilities of buy-side analysts by analyzing nontraditional mutual funds that are exclusively managed by in-house analysts rather than traditional portfolio managers. Analysts exhibit stronger general and job-specific investment abilities than traditional managers from within and outside the fund family. Using holdings of analystrun funds as a proxy for the analysts' best ideas, we document that more-skilled portfolio managers rely on analysts' ideas from the same family to a lesser extent than less-skilled managers. We find that analysts' abilities matter in that they are positively related to the future performance of other funds within the same family.

Suggested Citation

  • Cici, Gjergji & Rosenfeld, Claire, 2012. "The investment abilities of mutual fund buy-side analysts," CFR Working Papers 12-07, University of Cologne, Centre for Financial Research (CFR).
  • Handle: RePEc:zbw:cfrwps:1207
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    References listed on IDEAS

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    3. Jonathan B. Berk & Richard C. Green, 2004. "Mutual Fund Flows and Performance in Rational Markets," Journal of Political Economy, University of Chicago Press, pages 1269-1295.
    4. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, January.
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    6. Fama, Eugene F. & French, Kenneth R., 1993. "Common risk factors in the returns on stocks and bonds," Journal of Financial Economics, Elsevier, vol. 33(1), pages 3-56, February.
    7. Cici, Gjergji & Gibson, Scott & Moussawi, Rabih, 2010. "Mutual fund performance when parent firms simultaneously manage hedge funds," Journal of Financial Intermediation, Elsevier, vol. 19(2), pages 169-187, April.
    8. Vikram Nanda, 2004. "Family Values and the Star Phenomenon: Strategies of Mutual Fund Families," Review of Financial Studies, Society for Financial Studies, vol. 17(3), pages 667-698.
    9. Massa, Massimo & Reuter, Jonathan & Zitzewitz, Eric, 2010. "When should firms share credit with employees? Evidence from anonymously managed mutual funds," Journal of Financial Economics, Elsevier, vol. 95(3), pages 400-424, March.
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    Keywords

    Mutual Funds; Buy-Side Analysts; Performance Valuation;

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