Once a trader, always a trader: The role of traders in fund management

Gjergji Cici, Philipp Schuster and Franziska Weishaupt

No 24-01, CFR Working Papers from University of Cologne, Centre for Financial Research (CFR)

Abstract: Mutual fund families are increasingly assigning traders to manage corporate bond mutual funds. Using this setting to study the role of traders in investment management, we document that trader managers identify and exploit short-term trading opportunities at lower transaction costs. These skills are particularly valuable during periods of market stress. Moreover, trader managers exhibit sophisticated risk management behavior: They reduce credit risk during periods of market stress and take more maturity risk during periods of large interest rate fluctuations, while holding portfolios with greater convexity. The combination of these skills produces relative outperformance during periods of large interest rate fluctuations.

Keywords: traders; fund managers; transaction costs; corporate bonds (search for similar items in EconPapers)
JEL-codes: D83 G11 G23 J24 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-fmk and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/283003/1/1880416913.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfrwps:283003

Access Statistics for this paper

More papers in CFR Working Papers from University of Cologne, Centre for Financial Research (CFR) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().