Finding your calling: Matching skills with jobs in the mutual fund industry

Abstract

To best utilize labor, companies need to match employees’ skills with jobs that best fit those skills. Exploiting unique features of the mutual fund industry, we identify instances when this matching happens for fund managers and study its consequences. After fund managers are matched, they operate at higher productivity levels, exhibiting risk-adjusted performance improvement of 139-193 bps per year. Fund families use this information to maximize family value by reallocating existing and directing new capital to their matched managers, collecting higher fees from the matched managers’ funds, and spreading the expertise of matched managers to other managers in the family.

Keywords: human capital, mutual funds, occupational match finding

JEL Classification: G23, J24, J62, M50