The Department of Economics is pleased to invite you to a Macro, Risk and Sustainability seminar with Yue Xu, Aarhus University.
This paper investigates whether junior mutual fund managers benefit from working with senior colleagues, by focusing on managers that manage multiple funds. I find that having a new senior colleague significantly increases a junior fund manager’s revenue from other funds that she manages. To further explore the sources of this increase in revenues, I propose an extension of active investment skill framework in Berk and Green (2004) which features capital raising ability of fund managers. Empirical evidence suggests that a junior fund manager’s value added from active investment does not increase after having new senior colleagues, and both net and gross fund alphas decrease significantly, consistent with an increase in capital raising ability rather than active investment skill.