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Making a difference: European mutual funds distinctiveness and peers’ performance

Author

Listed:
  • BEREAU Sophie,

    (Université catholique de Louvain et Université de Namur)

  • GNABO Jean-Yves,

    (Université de Namur et Université Paris-Nanterre)

  • VANHOMWEGEN Henri,

    (Université de Namur)

Abstract

Skilled managers of equity mumtual funds can develop innovoative strategies to outsmart their style peers. We unveil various causes of distinct investment strategies and test whether they materialize into outperformance of peer competitors. We frame our paper on European funds and propose a novel procedure to measure and test the impact of strategy distinctiveness while dealing with endogenous style classification and sample noise in peers’ comparisons of performance. We find a strong, robust and positive impact of ostrategy distinctiveness on financial performance. Yet, the marginal effect decreases with the level of distinctiveness.

Suggested Citation

  • BEREAU Sophie, & GNABO Jean-Yves, & VANHOMWEGEN Henri,, 2019. "Making a difference: European mutual funds distinctiveness and peers’ performance," LIDAM Discussion Papers CORE 2019015, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2019015
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    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp2019.html
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    Keywords

    European equity mutual funds; distinctiveness; commonality; peer performance; adaptivei clustering;
    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
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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