Does Manager Race Impact Performance? An Examination of the US Mutual Fund Industry

51 Pages Posted: 27 Sep 2021

See all articles by Fred Dewald

Fred Dewald

University of Memphis

Steve Z. Fan

University of Wisconsin - Whitewater

Date Written: April 9, 2021


Using hand-collected fund manager race data, we study the current status of minority managers in the mutual fund industry. We investigate manager characteristics and performance differences between the minority (Asian, Black, Hispanic Latino) and White managers. Our results show that minorities are underrepresented in the fund management industry, especially Black and Hispanic managers. On average, 86.8% of single-manager funds are managed by White managers, while 8.3%, 2.7%, and 2.3% are Asian, Black, and Hispanic managers, respectively. Minority managers manage more international equity funds, while White managers manage more growth-focused funds. We show evidence that minority managers are younger and more educated, with shorter tenure and a lower percentage holding a CFA designation. The funds managed by White managers are larger in size, have a higher turnover ratio, and have greater exposure to market risk. Minority managed funds have higher monthly fund flows and take on greater idiosyncratic risk. We find no significant difference in fund returns or risk-adjusted abnormal returns (alpha) using different asset pricing models. These results are robust to various analytical methods, including Welch's t test, panel regression, and propensity score matching approach. The findings of this study can improve our understanding of mutual fund performance in general. More importantly, this study provides timely and imperative information to understand and address the lack of diversity in the mutual fund industry.

Keywords: race, racial, ethnicity, in-group bias, mutual fund, mutual fund manager, mutual fund performance, diversity, fund performance,

JEL Classification: G10, G11, G19, G23

Suggested Citation

Dewald, Frederick and Fan, Steve Z., Does Manager Race Impact Performance? An Examination of the US Mutual Fund Industry (April 9, 2021). Available at SSRN: or

Frederick Dewald (Contact Author)

University of Memphis ( email )

United States
8152604833 (Phone)

Steve Z. Fan

University of Wisconsin - Whitewater ( email )

800 W. Main Street
Whitewater, WI 53190
United States

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