Is the alma mater-industry preference an advantage for fund managers?

Jingyu Yang, Qing Zou, Dayong Dong and Chao Liang

Review of Accounting and Finance, 2025, vol. 24, issue 5, 683-713

Abstract: PurposeThis study uses the results of the Chinese university discipline evaluations, matching the universities’ advantageous disciplines with their corresponding industries. From the perspective of resource theory, this paper proposes that the industries corresponding to the advantageous disciplines of a fund manager’s alma mater constitute the advantageous industries of that alma mater. The study examines how these advantages influence fund managers’ decision-making.Design/methodology/approachOur sample comprises semi-annual observations of actively managed open-end equity funds from 2005 to the first half of 2023. This paper manually compiled this data using the results of four rounds of academic discipline evaluations, obtained from the China Academic Degrees and Graduate Education Development Center conducted between 2002 and 2017. This paper defines the advantaged industries of an alma mater as those industries associated with disciplines that received ratings in the academic evaluations of a given year. This paper constructs a profile of each fund manager’s investment preferences across various industries. Furthermore, this paper explores how the industrial strengths of a fund manager’s alma mater impact their industry-specific investment inclinations.FindingsThe findings reveal that fund managers do indeed significantly increase their investment in stocks associated with the advantaged industry domains of their alma maters. Moreover, this investment behavior is not strongly influenced by the fund managers’ personal academic majors but is primarily driven by the cognitive resources provided by their alma mater’s strengths in specific industry domains.Originality/valueThis finding has important implications for fund management companies and investors. Analyzing fund managers’ educational background, especially their alma maters’ strengths in specific industry domains, can provide valuable insights for identifying high-performing fund managers and funds. Furthermore, the study suggests that academic development plays a crucial role in enhancing the industry influence of higher education institutions. By strengthening academic disciplines and improving discipline evaluation standards, universities can not only enhance their position and impact in related industries but also foster closer integration between education and industry, thus providing fund managers with more cognitive resources and informational advantages.

Keywords: Fund managers; Portfolio allocation; University discipline evaluations; Advantaged industries; Fund performance (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:rafpps:raf-04-2025-0121

DOI: 10.1108/RAF-04-2025-0121

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