What Do Mutual Fund Managers' Private Portfolios Tell Us About Their Skills?

Abstract

I collect a registry-based dataset on the personal portfolios of Swedish mutual fund managers. The managers who invest (a lot of) personal money in their own funds generate positive abnormal returns. Some managers are betting on their best ideas by investing personal money in individual securities that are simultaneously held by their funds. The majority do not invest in their funds nor in their funds' constituents, and hold more cash and more passive funds in their personal portfolios. Overall, the results suggest that fund managers are highly certain about their ability---or more often lack thereof---and invest their personal wealth accordingly.

Keywords: Mutual fund performance, Fund manager skill, Fund manager ownership

JEL Classification: G00, G11, G23, J44