Are Mutual Fund Manager Skills Transferable to Private Funds?

48 Pages Posted: 7 May 2019 Last revised: 8 Jul 2021

See all articles by Ying Sophie Huang

Ying Sophie Huang

affiliation not provided to SSRN

Bing Liang

University of Massachusetts Amherst - Department of Finance

Kai Wu

Central University of Finance and Economics (CUFE) - School of Finance

Date Written: June 28, 2021

Abstract

We evaluate how work experience in mutual funds affects manager skills after they switch to private funds. Using a proprietary Chinese private fund database from 2012 to 2016, we document that, despite their work experience in mutual funds, switched private fund managers significantly underperform compared with their peer managers in private funds. In particular, the investment skills of smart managers with superior track records in mutual funds deteriorate after the career switch. Moreover, the reduction in skills of smart managers is mainly attributable to the loss of corporate research support in private funds. Our findings demonstrate that the skill sets of mutual fund managers are hardly transferable to the private fund industry.

Keywords: private funds, mutual funds, investment skills, work experience

JEL Classification: G10, G11, G14

Suggested Citation

Huang, Ying Sophie and Liang, Bing and Wu, Kai, Are Mutual Fund Manager Skills Transferable to Private Funds? (June 28, 2021). International Review of Economics & Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3369279 or http://dx.doi.org/10.2139/ssrn.3369279

Ying Sophie Huang

affiliation not provided to SSRN

No Address Available

Bing Liang

University of Massachusetts Amherst - Department of Finance ( email )

Amherst, MA 01003
United States

Kai Wu (Contact Author)

Central University of Finance and Economics (CUFE) - School of Finance ( email )

Beijing
China

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