Product market linkages, manager quality, and mutual fund performance
Document Type
Article
Publication Title
Review of Finance
Abstract
Mutual funds typically invest a disproportionately large portion of their portfolio in one industry (main industry). We present a simple theoretical model to demonstrate that better mutual fund managers make larger investments in the important supplier/customer industries related to the main industry. Consistent with our theory, empirical tests on a large sample of mutual funds show that investment in related industries is positively associated with fund performance and plays a more significant role in explaining fund performance than investment in the main industry. Furthermore, the positive relation between main investment and fund performance obtains only when related investment is high.
DOI Link
Publication Date
1-4-2013
Publisher
Oxford University Press
Volume
Vol.17
Issue
Iss.6
Recommended Citation
Huang, Lixin and Kale, Jayant Raghunath, "Product market linkages, manager quality, and mutual fund performance" (2013). Faculty Publications. 1706.
https://research.iimb.ac.in/fac_pubs/1706
