Fund Manager Characteristics and Mutual Fund Performance

Abstract

This study establishes an effective system to evaluate mutual fund performance. It helps to clarify how excess return and risk contribute to fund performance, and how fund managers' timing and selectivity abilities affect the return of funds. In addition, we link fund manager characterisitcs with fund performance, excess return, and risk, which deepens our understanding regarding the components of fund performance and provides insighst as to how to pick fund managers. Results show that the excess return per unit of risk is mainly driven by return (the numberator effect), rather than by risk (the denominator effect). In addition, we also find that the stock selectivity ability of fund managers is positively associated with the excess return of funds. Furthermore, we also find that fund managers with young age and CFA qualifications outperform their peers.