Chart of the Day: Managers’ Attractiveness and Fund Performance
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Today’s Chart of the Day comes from an academic paper by Chengyu Bai with the Shanghai Jiao Tong University. It shows that funds with “attractive” managers underperform funds with “unattractive” managers by over 2% per year.The research also shows that more money went to managers who were attractive when photos were accessible to investors. The researchers used artificial intelligence to quantify facial attractiveness and explained the underperformance is likely due to inadequate abilities, lack of effort, and overconfidence.
As a money manager, one of our services is to recognize and overcome this and about 15 other biases that harm decision making. As one of my colleagues once said, “We try to be bias against the biases.”
Samuel serves as Senior Vice President, Chief Investment Officer for the Crews family of banks. He manages the individual investment holdings of his clients, including individuals, families, foundations, and institutions throughout the State of Florida. Samuel has been involved in banking since 1996 and has more than 20 years experience working in wealth management.
Investments are not a deposit or other obligation of, or guaranteed by, the bank, are not FDIC insured, not insured by any federal government agency, and are subject to investment risks, including possible loss of principal.