Cognitive Skills and Economic Preferences in the Fund Industry

Abstract By running a battery of experiments with fund managers, we investigate the impact of cognitive skills and economic preferences on their professional decisions. First, we find that fund managers’ risk tolerance positively correlates with fund risk when accounting for fund benchmark, fund category, and other controls. Second, we show that fund managers’ ambiguity tolerance positively correlates with the funds’ tracking error from the benchmark. Finally, we report that cognitive skills do not explain fund performance in terms of excess returns. However, we do find that fund managers with high cognitive reflection abilities compose funds at lower risk.

Download Full-text

Cognitive Skills and Economic Preferences in the Fund Industry

10.31219/osf.io/964ba ◽

2019 ◽

Author(s):

Adam Farago ◽

Martin Holmén ◽

Felix Holzmeister ◽

Michael Kirchler ◽

Michael Razen

Keyword(s):

Cognitive Skills ◽

Tracking Error ◽

Fund Performance ◽

Risk Tolerance ◽

The European Union ◽

Ambiguity Tolerance ◽

Fund Managers ◽

Cognitive Reflection ◽

Economic Preferences ◽

The Impact

By running a battery of incentivized and non-incentivized experiments with fund managers from four countries in the European Union, we investigate the impact of fund managers' cognitive skills and economic preferences on the dynamics of the mutual funds they manage. First, we find that fund managers' risk tolerance positively correlates with fund risk when accounting for fund benchmark, fund category, and other controls. Second, we show that fund managers' ambiguity tolerance positively correlates with the funds' tracking error from the benchmark. Finally, we report that cognitive skills do not explain fund performance in terms of excess returns. However, we do find that fund managers with high cognitive reflection abilities generate these returns at lower risk.

Download Full-text

The Impact of Macroeconomic Variables on Mutual Funds Performance in Ghana

International Journal of Scientific Research in Science Engineering and Technology ◽

10.32628/ijsrset218213 ◽

2021 ◽

pp. 34-53

Author(s):

Cai Li ◽

Rosemond Atampokah ◽

Helena Akolpoka ◽

Priscilla Avonie ◽

Baku R. Kwame

Keyword(s):

Mutual Funds ◽

Mutual Fund ◽

Fund Performance ◽

Foreign Portfolio Investment ◽

Macroeconomic Variables ◽

Macroeconomic Conditions ◽

Fund Managers ◽

The World ◽

World Champion ◽

The Impact

Development across the globe has been an agenda many citizens of the world champion irrespective of the area, sector or discipline within which it is being advocated. Politically, socially, and in the world of economics, mutual fund has gained significance within country’s economic environment. The phenomenal growth in the financial market of mutual funds can be attributed to the increase in the various financial schemes available, improvement in fund mobilization, as well as the growth of investments in the country. We examined the impact of macroeconomic variables on mutual fund performance of all mutual fund companies in Ghana over the period of 2008 to 2016. We performed correlation analysis, hence examined the co-movement of the returns from the selected funds with the key macroeconomic variables. We find macroeconomics variables positively affect the returns of funds. The effect comes by the amount of money available for investments. We further find exchange rate as the strongest macroeconomic variable affects the performance of mutual funds in Ghana. We established that Ghana receives a significant amount of foreign portfolio investment (FPI), where investors in other countries bring in their money to make investment on our financial markets. Our results provide evidence for fund managers on approach in dealing with macroeconomic conditions and its volatilities.

Download Full-text

Aspects of manager, portfolio allocation, and fund performance in Brazil

Revista Contabilidade & Finanças ◽

10.1590/1808-057x201804590 ◽

2018 ◽

Vol 29 (76) ◽

pp. 82-96 ◽

Cited By ~ 2

Author(s):

Cláudia Olímpia Neves Mamede Maestri ◽

Rodrigo Fernandes Malaquias

Keyword(s):

Asset Allocation ◽

Robust Statistics ◽

Breakdown Point ◽

Fund Performance ◽

Investment Fund ◽

Fixed Income ◽

Investment Funds ◽

Fund Managers ◽

Portfolio Holdings ◽

The Impact

ABSTRACT This paper intends to contribute to the literature on investment funds in emerging markets by looking at the performance of multimarket funds in Brazil from a manager perspective. The aim of the paper was to analyze whether some characteristics of investment fund managers, as well as their portfolio holdings, can affect fund performance. In emerging countries both portfolio asset allocation and manager characteristics can help explain differences in the fund performance, which increases the relevance of this study. Therefore, the impact of this research lies in its revealing a significant relationship between risk-adjusted return and the portion of portfolios allocated to fixed or variable income, which seems that have not been explored in the context of emerging economies yet. A total of 6,002 multimarket funds were analyzed, covering the period between September 2009 and December 2015, using panel data with robust standard errors clustered by funds. We also employed robust statistics in order to assess some potential biases due to outliers, by analyzing the breakdown point in the estimated models. It should be noted that portfolio composition (allocation of portfolios into variable income and fixed income) was the most important factor in explaining a potential change in the performance of Brazilian multimarket funds. Also important were the effectiveness of the management of these funds, that is, the best risk-adjusted returns were delivered by less experienced managers, funds investing more in fixed income, managers with more funds under management, and larger funds.

Download Full-text

An Empirical Analysis of the Impact of Fund Manager’s Personal Characteristics on Fund Performance in China’s Fund Market - Based on DEA Model and Threshold Panel Model

International Journal of Financial Research ◽

10.5430/ijfr.v9n2p216 ◽

2018 ◽

Vol 9 (2) ◽

pp. 216 ◽

Cited By ~ 1

Author(s):

Jialin Li ◽

Siying Li

Keyword(s):

Positive Impact ◽

Personal Characteristics ◽

Educational Background ◽

Fund Performance ◽

Professional Skills ◽

Dea Model ◽

Fund Managers ◽

Panel Model ◽

Study Experience ◽

The Impact

This paper chooses 11 personal characteristics of fund managers in China’s fund market and classifies them into four categories: physiological characteristics, educational background, professional experience and professional skills. Then, the paper uses DEA model and threshold panel model to study influences of fund managers’ personal characteristics on fund performance in China’s fund market. In this paper, the model of input-oriented DEA is used to calculate super efficiency DEA which measures fund performance. Empirical findings show that number of working days, years of being fund manager, number of funds held, master’s degree or doctorate degree, MBA degree, overseas study experience and the fund’s performance, has significant positive impact on fund performance, while age is negatively correlated with fund performance. In addition, the availability of professional skills such as CPA and CFA and the absence of major in business have no significant effect on fund performance.

Download Full-text