Running a Mutual Fund: Performance and Trading Behavior of Runner Managers

Abstract

This paper examines the relationship between the representation of marathon runners in a fund management team and its future performance. We find that funds with a larger proportion of runner managers have a higher level of risk-adjusted excess returns. We also find that these funds have a lower level of disposition bias, deviate more from their benchmark portfolios, hold fewer stocks in their portfolios, and hold their stocks for a longer duration. Also, they tend to hold more stocks that are about to experience desirable earnings outcomes. Overall, the results suggest that personality traits that affect achievement in other dimensions of life may translate into fund management success.

Keywords: managerial characteristics; mutual fund performance; distance runners; disposition effect; investment style.

JEL Classification: G11, G20, G41