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Alumni Networks and Investment Strategy: Evidence from Chinese Mutual Funds

Author

Listed:
  • Tong Qi
  • Jian Li
  • Wenjing Xie
  • Haoyuan Ding

Abstract

While fund managers are connected by interpersonal linkages, the investment strategy of a mutual fund would follow a similar pattern due to interpersonal communications and information exchange. This paper focuses on the connection of fund managers via a shared educational network (university alumni connection) in China. Based on a manually collected dataset with the detailed transaction and manager information, our results were threefold: (1) Mutual fund managers with an alumni connection tend to have similar portfolio allocation; the network effect is heterogeneous for different manager characteristics, fund characteristics, and alumni types. (2) A dynamic learning strategy for fund managers exists where they tend to mimic the past portfolio choices of others within the alumni network. (3) The performance of connected funds is worsened by the degree of the connection.

Suggested Citation

  • Tong Qi & Jian Li & Wenjing Xie & Haoyuan Ding, 2020. "Alumni Networks and Investment Strategy: Evidence from Chinese Mutual Funds," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(11), pages 2639-2655, September.
    • Handle: RePEc:mes:emfitr:v:56:y:2020:i:11:p:2639-2655
    DOI: 10.1080/1540496X.2019.1643321
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    Cited by:

    1. GuoHua Cao & WenJun Geng & Jing Zhang & Qi Li, 2023. "Social network, financial constraint, and corporate innovation," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(3), pages 667-692, September.
    2. Lin, Junqin & Wang, Fan & Wei, Lijian, 2021. "Alumni social networks and hedge fund performance: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 78(C).
    3. Fei Nie & Jian Li & Xiaoli Etienne & Gucheng Li, 2023. "Impact of Outward Foreign Direct Investment on Chinese Manufacturing Firms' Financialization and Servitization," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 31(2), pages 112-136, March.

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