Are Mutual Fund Manager Skills Transferable to Private Funds?

55 Pages Posted: 7 May 2019 Last revised: 7 Oct 2019

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: October 6, 2019

Abstract

We evaluate how work experience in mutual funds affects manager skills after they switched to private funds. Using a novel Chinese private fund database from 2012 to 2016, we document that private fund managers remarkably underperform compared with other fund managers, despite their work experience in mutual funds. Smart managers with superior track records in mutual funds are negatively affected and experience deteriorated investment skills after switching careers. Moreover, the reduction in the skills of smart managers is attributable to the loss of corporate support in research and marketing in private funds. Our findings demonstrate that the skill sets of mutual fund managers are not fully transferable to the private fund industry.

Keywords: private fund, investment skill, 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? (October 6, 2019). 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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