Standing Out in the Fund Family: Deviation from a Family Portfolio Predicts Mutual Fund Performance

51 Pages Posted: 1 Sep 2011 Last revised: 22 Jun 2013

See all articles by Mikhail Simutin

Mikhail Simutin

University of Toronto - Rotman School of Management

Date Written: June 21, 2013

Abstract

This paper investigates the role of the family organization of the mutual fund industry in shaping managerial portfolio decisions and fund performance. Mutual fund managers who actively deviate from the "average" portfolio of other funds in the same fund family significantly outperform managers who passively mimic their family's portfolio. The superior performance of high-deviation managers is driven by their better stock-selection and timing abilities. Skilled managers deviate from the family portfolio because withholding their investment ideas from family peers enables such managers to achieve top rank in the family and benefit from the preferential treatment granted to best-performing family members. I show that deviation from a family portfolio is a new dimension of active management and argue that it captures superior managerial skill.

Keywords: Mutual fund performance, value of active management, fund family, fund company

JEL Classification: G12

Suggested Citation

Simutin, Mikhail, Standing Out in the Fund Family: Deviation from a Family Portfolio Predicts Mutual Fund Performance (June 21, 2013). Available at SSRN: https://ssrn.com/abstract=1920357 or http://dx.doi.org/10.2139/ssrn.1920357

Mikhail Simutin (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

HOME PAGE: http://www.rotman.utoronto.ca/simutin

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
390
Abstract Views
1,673
rank
81,820
PlumX Metrics