Doctors managing mutual funds: Returns to specialization in asset management

Leonard Kostovetsky and Vladimir Ratushny

Journal of Financial Markets, 2024, vol. 70, issue C

Abstract: We investigate the returns to specialized knowledge in asset management by comparing the performance of medical specialists versus generalists in managing healthcare sector mutual funds. Specialist alpha is 5% higher on an annualized basis. This result is robust to controlling for other observable characteristics and using different performance measures, subperiods, and variable definitions. The positive effect of a medical education on fund performance and specialists’ ability to time industry-specific events suggest that knowledge-based skills, rather than social connections, are key to specialist outperformance. Our paper provides new evidence on fund manager characteristics that provide a competitive advantage in generating alpha.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finmar:v:70:y:2024:i:c:s138641812400034x

DOI: 10.1016/j.finmar.2024.100916

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