Abstract
We introduce a novel methodology to identify copycat behavior in mutual funds. We find that imitation is pervasive in the mutual fund industry. While most copycats underperform, a small number are 'smart imitators'. We find that funds at the high and low ends of the Copycat Score range outperform other funds in the sample by 1.92% and 3.24% per year, respectively. We show that the Copycat Score is persistent in time, related to other measures of skill, and is a good predictor of fund performance. We conclude that smart copycatting is another skill in the toolkit of successful fund managers.
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