Mendoza School of Business

Do financial experts invest better than non-experts? Research suggests no

Published: November 4, 2014 / Author: Preet Banerjee

It would be reasonable to assume that the personal investment portfolios of professional fund managers should outperform non-professional investors. But that might not be the case.

A new research paper examined the personal portfolios of 84 mutual fund managers in Sweden. Authors Andriy Bodnaruk from the University of Notre Dame and Andrei Simonov from Michigan State University couldn’t find any evidence that financial experts invest better than non-experts in the same socio-economic class. The fund managers also failed to diversify their risk better and showed some of the same behavioural biases that afflict us mere mortals.


It could be difficult to get fund managers to spill the beans on their personal portfolios. But it turns out the researchers didn’t have to ask. In Sweden, there is a wealth tax and in order to collect, the government requires detailed records of investment portfolios. Information on the personal portfolios of the fund managers was available right down to the individual security level. The researchers had a field day with the data.

View this story on The Globe and Mail website.