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Emerging market active managers: Skilled or stubborn?

Author

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  • Fasano, Antonio
  • Galloppo, Giuseppe

Abstract

This paper examines the impact of active management–intended as an investment policy focusing on specific assets/styles–on portfolios’ risk–return profiles, at country level and at whole market level, with respect to the BRIC area. Active management is often coupled with overconfidence in stock-picking exhibited by those fund managers who overweight the portfolio with securities for which they have a strong belief and perhaps an emotional commitment. To this end, the main question this study wishes to answer concerns whether the lack of portfolio diversification is the consequence of fund managerial skills, generating a positive alpha, or it is determined by their attitude to overestimate private (local) information and their self-ability to beat the market. The study does not find evidences of focused portfolios overperformance, which suggests behavioural biases prevail over a disciplined asset allocation approach.

Suggested Citation

  • Fasano, Antonio & Galloppo, Giuseppe, 2016. "Emerging market active managers: Skilled or stubborn?," Journal of Behavioral and Experimental Finance, Elsevier, vol. 9(C), pages 132-135.
    • Handle: RePEc:eee:beexfi:v:9:y:2016:i:c:p:132-135
    DOI: 10.1016/j.jbef.2015.11.001
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    Citations

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    Cited by:

    1. Zamri Ahmad & Haslindar Ibrahim & Jasman Tuyon, 2017. "Behavior of fund managers in Malaysian investment management industry," Qualitative Research in Financial Markets, Emerald Group Publishing Limited, vol. 9(3), pages 205-239, August.
    2. Patel, Mayank & Madhavan, Vinodh & Gupta, Supratim Das & Kumar, Satish, 2023. "Performance persistence and style consistency of Indian fixed income mutual funds – A longitudinal study," International Review of Financial Analysis, Elsevier, vol. 86(C).

    More about this item

    Keywords

    BRIC markets; Active investment; Overconfidence; Alpha; Risk measures;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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