Fund managers with wealthy backgrounds perform the worst

Press/Media: Expert Comment


Cited: "Sociologist Nicholas Harrigan said directors of Australia’s top 100 corporations were about five times more likely to have attended elite high schools."

Period24 Aug 2016

Media contributions


Media contributions

  • TitleFund managers with wealthy backgrounds perform the worst
    Degree of recognitionNational
    Media name/outletThe Australian
    Media typePrint
    Duration/Length/SizeNewspaper article
    Fund managers from fancy schools perform far worse than their peers from humble backgrounds, according to a landmark new study that finds family wealth matters far more for returns than qualifications or experience.

    Managers born into the richest quintile of families — defined by parental income, home value or rent — produced fund returns 2.2 percentage points worse than their peers from the lowest quintile, according to a study of around 300 US fund managers from 1975 to 2012.

    That’s equivalent to about double the average annual fund management fees in Australia.

    “Managers endowed with a low economic status at birth face higher entry barriers into asset management, and only the highest-quality candidates succeed in entering the profession,” the study said. While all managers underperformed the relevant benchmark index by 0.5 per cent per cent a year on average over the 37 years, those from the richest families cost their funds about $US40 million a year more...
    Producer/AuthorAdam Creighton
    PersonsNicholas Harrigan