The Impact of Fund and Managerial Heterogeneities on Mutual Fund Performance

Abstract

Recent studies on the mutual fund industry have examined the influence of attributes of mutual funds and individual mutual fund managers on fund outcomes. However, few studies focus on the impact of the unobservable fund and managerial attributes. In this study, I use estimated fund manager and family fixed effects to investigate the impact of unobservable attributes of fund managers on future fund performance. Using U.S. mutual fund and manager information obtained from Morningstar Direct, I find that future investor fund flows respond positively to manager and family performance fixed effects. Also, I find some evidence that funds with higher alpha-based manager and family effect estimates are associated with superior fund performance.

Keywords: Mutual Fund Performance, Individual Fixed Effects, Mutual Fund Flow

JEL Classification: G11