‘Smart’ copycat mutual funds: on the performance of partial imitation strategies
Abstract Using a novel measure of stock-level trade imitation, we uncover ‘smart’ copycats: fund managers that use their own information when beneficial, and otherwise imitate other managers’ better trades. Contrary to previous research, we find that these partial imitation strategies lead to outper...
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| Format: | Article |
| Language: | English |
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SpringerOpen
2022-10-01
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| Series: | Financial Innovation |
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| Online Access: | https://doi.org/10.1186/s40854-022-00398-7 |
| _version_ | 1811256983799463936 |
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| author | Roberto Stein |
| author_facet | Roberto Stein |
| author_sort | Roberto Stein |
| collection | DOAJ |
| description | Abstract Using a novel measure of stock-level trade imitation, we uncover ‘smart’ copycats: fund managers that use their own information when beneficial, and otherwise imitate other managers’ better trades. Contrary to previous research, we find that these partial imitation strategies lead to outperformance. Our ‘Copycat Score’ combines the propensity to imitate and to lead trades. Funds at the high and low ends of the score outperform all others. The Copycat Score is persistent in time, related to other measures of skill, and a good predictor of fund performance. We conclude that smart copycatting is another skill of successful fund managers. |
| first_indexed | 2024-04-12T17:49:32Z |
| format | Article |
| id | doaj.art-fc102eb0fdad45f6a9bfaa6ebfe5a016 |
| institution | Directory Open Access Journal |
| issn | 2199-4730 |
| language | English |
| last_indexed | 2024-04-12T17:49:32Z |
| publishDate | 2022-10-01 |
| publisher | SpringerOpen |
| record_format | Article |
| series | Financial Innovation |
| spelling | doaj.art-fc102eb0fdad45f6a9bfaa6ebfe5a0162022-12-22T03:22:32ZengSpringerOpenFinancial Innovation2199-47302022-10-018113110.1186/s40854-022-00398-7‘Smart’ copycat mutual funds: on the performance of partial imitation strategiesRoberto Stein0Department of Finance, University of Nebraska-LincolnAbstract Using a novel measure of stock-level trade imitation, we uncover ‘smart’ copycats: fund managers that use their own information when beneficial, and otherwise imitate other managers’ better trades. Contrary to previous research, we find that these partial imitation strategies lead to outperformance. Our ‘Copycat Score’ combines the propensity to imitate and to lead trades. Funds at the high and low ends of the score outperform all others. The Copycat Score is persistent in time, related to other measures of skill, and a good predictor of fund performance. We conclude that smart copycatting is another skill of successful fund managers.https://doi.org/10.1186/s40854-022-00398-7Copycat portfoliosMutual fundsPortfolio holdingsFund performanceFund manager skill |
| spellingShingle | Roberto Stein ‘Smart’ copycat mutual funds: on the performance of partial imitation strategies Financial Innovation Copycat portfolios Mutual funds Portfolio holdings Fund performance Fund manager skill |
| title | ‘Smart’ copycat mutual funds: on the performance of partial imitation strategies |
| title_full | ‘Smart’ copycat mutual funds: on the performance of partial imitation strategies |
| title_fullStr | ‘Smart’ copycat mutual funds: on the performance of partial imitation strategies |
| title_full_unstemmed | ‘Smart’ copycat mutual funds: on the performance of partial imitation strategies |
| title_short | ‘Smart’ copycat mutual funds: on the performance of partial imitation strategies |
| title_sort | smart copycat mutual funds on the performance of partial imitation strategies |
| topic | Copycat portfolios Mutual funds Portfolio holdings Fund performance Fund manager skill |
| url | https://doi.org/10.1186/s40854-022-00398-7 |
| work_keys_str_mv | AT robertostein smartcopycatmutualfundsontheperformanceofpartialimitationstrategies |