Fund Manager Narcissism

Abstract

Analyzing verbatim interviews, we show that mutual fund managers’ level of narcissism is highly relevant for money management. Supporting the notion that narcissists disregard agreements more often than others, we find that narcissistic fund managers are 34% more likely to deviate from the advertised investment style. A security-by-security analysis of the style-inconsistent funds suggests that fund manager narcissism can explain why these funds tend to make more growth and small-cap bets. Moreover, consistent with a myopic focus on rewards, narcissistic fund managers underperform their peers by an average 1% p.a. We discuss the managerial and policy implications of our results.

Keywords: Narcissism, mutual funds, style consistency, personality traits, risk-taking, retail finance

JEL Classification: D91, G11, G41, G51