The Effect of Management Team Characteristics on Risk-Taking and Style Extremity of Mutual Fund Portfolios
April 20, 2012
Review of Financial Economics, 21(3), 153-158, 2012
This paper investigates the effect of management team-level characteristics on portfolio risk and style extremity using a unique dataset of 1,678 mutual fund managers. Results show that teams with more members, longer tenure, and more members with graduate business training hold less risky portfolios. The opposite is true for teams whose members engage in side-by-side management; that is, they manage multiple funds simultaneously. Member diversity is related to less extreme style decisions. These findings have important implications for fund management companies as they make decisions about the composition of management teams as well as for individual investors’ investment allocation decisions.
Keywords: mutual fund, team-manager, portfolio risk
JEL Classification: G23, L22, M12Accepted Paper Series
Date posted: April 29, 2012 ; Last revised: November 12, 2012
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