Back to the Roots: Ancestral Origin and Mutual Fund Manager Portfolio Choice

60 Pages Posted: 8 Jul 2021

See all articles by Manuel Ammann

Manuel Ammann

University of St. Gallen - School of Finance

Alexander Cochardt

University of St. Gallen - School of Finance

Simon Straumann

WHU - Otto Beisheim School of Management

Florian Weigert

University of Neuchatel - Institute of Financial Analysis; University of Cologne - Centre for Financial Research (CFR)

Date Written: July 3, 2021

Abstract

We exploit variation in the ancestries of U.S. equity mutual fund managers and show that ancestry affects portfolio decisions. Controlling for fund firm location, we find that funds overweight stocks from their managers' ancestral home countries in their non-U.S. portfolio by 132 bps or 20.34% compared with their peers. Similarly, funds overweight industries that are comparatively large in their manager's ancestral home countries. The documented ancestral biases are pervasive across fund styles and across different manager ancestries. The effect is more pronounced for funds that are less resource-constrained and for managers whose connection to their ancestral home country is more recent. Stocks linked to managers' ancestry do not outperform stocks in the same countries and industries but held by managers of other ancestry, confirming that ancestry-linked investments are not informed.

Keywords: Culture, Home Bias, Mutual Funds, Portfolio Choice, Fund Managers

JEL Classification: G11,G41

Suggested Citation

Ammann, Manuel and Cochardt, Alexander and Straumann, Simon and Weigert, Florian, Back to the Roots: Ancestral Origin and Mutual Fund Manager Portfolio Choice (July 3, 2021). Available at SSRN: https://ssrn.com/abstract=3879492 or http://dx.doi.org/10.2139/ssrn.3879492

Manuel Ammann

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

Alexander Cochardt (Contact Author)

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

Simon Straumann

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Florian Weigert

University of Neuchatel - Institute of Financial Analysis ( email )

Pierre-a-Mazel,7
Neuchatel, CH-2000
Switzerland

University of Cologne - Centre for Financial Research (CFR) ( email )

Albertus-Magnus Platz
Cologne, 50923
Germany

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