Journal Articles

The People in Your Neighborhood: Social Interactions and Mutual Fund Portfolios

2014, forthcoming Journal of Finance

V. Krepely Pool, N. Stoffman, S. Yonker

Abstract

We find that socially connected fund managers have more similar holdings and trades. The portfolio overlap of funds whose managers reside in the same neighborhood is considerably higher than that of funds whose managers live in the same city but in different neighborhoods. These effects are larger when managers are neighbors longer or are of a similar ethnic background, and are not explained by preferences. Valuable information is transmitted through these peer networks: a long-short strategy composed of stocks purchased minus sold by neighboring managers delivers positive risk-adjusted returns. Unlike prior empirical work, our tests disentangle the effects of social interactions from community effects.

Citation

Pool, Veronika Krepely, Noah Stoffman, and Scott Yonker (2014), "The People in Your Neighborhood: Social Interactions and Mutual Fund Portfolios," Journal of Finance, forthcoming.

Kelley School of Business

Faculty & Research