Does Mutual Fund Working Experience Affect Private Fund Performance?

46 Pages Posted: 7 May 2019 Last revised: 11 Jun 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: June 9, 2019

Abstract

We evaluate how prior mutual fund working experience affects private fund managers' performance. Using a novel Chinese private fund database from 2012 to 2016, we document significantly lower excess returns and higher left-tail risks for private fund managers with prior mutual fund working experience. Such effect is concentrated in switched managers with lower performance ranks in mutual funds. Additionally, the underperformance is attributable to reduced research support, change in investment styles, and deteriorated market timing skills, while incentive schemes help alleviate such underperformance. Our findings demonstrate the key role of industry-specific human capital in the asset management industry.

Keywords: private fund, mutual fund working experience, China

JEL Classification: G10, G11, G14

Suggested Citation

Huang, Ying Sophie and Liang, Bing and Wu, Kai, Does Mutual Fund Working Experience Affect Private Fund Performance? (June 9, 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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