Look for People, Not for Alpha: Mutual Funds Success and Managerial Intellectual Capital

Abstract

This is the first paper to explore which characteristics of Russian fund managers are connected with a higher abnormal return (measured by Jensen’s alpha) and risk (beta) for mutual funds. While only some fund managers publish biographic sketches we use the Heckman procedure to control for self-selection issues. The results support the idea that individual characteristics indicate the possibility to earn abnormal alpha. The relationship between both fund performance measures and manager experience has inverted U-shape. The results can be used as a simple screening system that helps to choose a mutual fund to invest in without sophisticated calculations.

Keywords: Russia, equity funds, individual intellectual capital, Jensen’s alpha

JEL Classification: J24, G11, G23, M50