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Doctors managing mutual funds: Returns to specialization in asset management

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  • Kostovetsky, Leonard
  • Ratushny, Vladimir

Abstract

We investigate the returns to specialized knowledge in asset management by comparing the performance of medical specialists versus generalists in managing healthcare sector mutual funds. Specialist alpha is 5% higher on an annualized basis. This result is robust to controlling for other observable characteristics and using different performance measures, subperiods, and variable definitions. The positive effect of a medical education on fund performance and specialists’ ability to time industry-specific events suggest that knowledge-based skills, rather than social connections, are key to specialist outperformance. Our paper provides new evidence on fund manager characteristics that provide a competitive advantage in generating alpha.

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  • Kostovetsky, Leonard & Ratushny, Vladimir, 2024. "Doctors managing mutual funds: Returns to specialization in asset management," Journal of Financial Markets, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:finmar:v:70:y:2024:i:c:s138641812400034x
    DOI: 10.1016/j.finmar.2024.100916
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