Are You Smarter than a CFA'er? Manager Qualifications and Portfolio Performance

Abstract

Several studies have examined whether a portfolio manager having an MBA degree or being a CFA charter holder leads to superior portfolio performance, with generally mixed results. Possible reasons for the mixed findings are that most studies have considered the impact of a manager having either an MBA or a CFA separately, have not controlled for managers’ style targets, and have used different performance metrics. We examine separately and jointly the impact of portfolio managers having an MBA, a CFA and investment experience on portfolio performance, while controlling for market conditions and style targets, using five different portfolio performance measurements, and two different risk measurements. For individual models or methods, we find various weak evidence consistent with most previous literature. Once we take all the models and methods jointly into consideration, we find no significant difference in returns attributable to MBA, CFA or Experience, but more significantly, we find that on average, CFAs reduce and MBAs increase portfolio risk.

Keywords: CFA, MBA, Portfolio management, Manager qualifications

JEL Classification: G11, G23