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Fund managers who graduated from elite schools give a worse performance than their colleagues coming from a more humble background, the recent survey has found. The study has shown that family affluence plays a far greater role for returns than for work experience and qualifications.
In accordance with a survey conducted with the help of 300 US fund managers from 1975 to 2012, the following data was collected: those managers who were born in the richest of families produced fund returns 2.2% worse than their colleagues coming from more humble families.
The authors of the study commented the next: “Mutual fund managers from wealthier backgrounds deliver significantly weaker performance than those descending from less wealthy families”.
The founder of Wilson Asset Management Geoff Wilson says that his firm are deliberately not employing people from affluent families, saying that they value higher those candidates who had to fight their way to the top on their own.
The study also found out that the managers belonging to the bottom quartile of wealth have to showcase annual returns 6.6% higher in order to keep up with their peers holding a privileged status.
The managing director of Sandon Capital Gabriel Radzyminski that in the field of funds management it is more difficult to hide from connections and nepotism in comparison with other fields. He made the harsh statement: “It’s so black and white: you’ve either done well or you haven’t”.
The study was only focusing on solo-managed funds where performance can be assigned to an individual manager.
Managers with MBAs showed drastically worse returns while having a family member who had previously worked in the field of finances showing excellent returns. Women were not included in the study, which was a frustration for Wilson. He commented: “Females are better fund managers. They don’t have the testosterone, the ego; bravado doesn’t get in the way.”
Another sociologist Nicholas Harrigan mentioned that the directors of Australia’s top 100 firms were five times more likely to graduate from fancy high schools.