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In Military We Trust: The Effect of Managers' Military Background on Mutual Fund Flows

Author

Listed:
  • Alexander Cochard
  • Stephan Heller
  • Vitaly Orlov

Abstract

This paper shows that trust-building characteristics of fund managers affect purchase decisions of mutual fund investors. We exploit variation in fund managers’ prior affiliations with the well-trusted U.S. military institution and relate it to fund flows. Results show that funds with ex-military managers have 43% higher flows and grow by 14.4% p.a. faster relative to other funds. Investor inclination toward military managers strengthens with manager’s military involvement and its salience, and nationwide confidence in the military. Military managers’ superiority in competition for investor funds is not due to variation in fund or managerial attributes and robust to several alternative explanations.

Suggested Citation

  • Alexander Cochard & Stephan Heller & Vitaly Orlov, 2018. "In Military We Trust: The Effect of Managers' Military Background on Mutual Fund Flows," Working Papers on Finance 1826, University of St. Gallen, School of Finance.
    • Handle: RePEc:usg:sfwpfi:2018:26
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    References listed on IDEAS

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    More about this item

    Keywords

    Trust; Mutual Funds; Investment Decision; Fund Managers; Military;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

    NEP fields

    This paper has been announced in the following NEP Reports:

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