Finance Seminar（2015-12）

Topic: Luck or Skill? Evidence from Bereaved Fund Managers

Speaker: Tao Shu, University of Georgia

Time: Wednesday, 6 May, 10:00-11:30

Location: Room 217, Guanghua Building 2

Abstract: This paper examines the effects of filial bereavement on mutual fund managers. We find that mutual funds experience a decline in fund return of 3 percentage points around the parental deaths of their managers. This underperformance persists for six to twelve months following the event, consistent with longer-term depressive impact of parental death on fund managers. We also observe these bereaved funds becoming less aggressive as they reduce tracking errors of fund returns and shift their holdings to larger cap stocks. Our findings are inconsistent with the hypothesis that mutual fund performance is largely driven by random noise; instead, they indicate that mutual managers can use their skill to create value but fund performance can be influenced negatively by disruptions in the managers’ personal lives.