Warren Buffett is an exception in many ways. The 86 year old star investor from Omaha has with its equity investments and the purchase of entire companies over a long period better than the American stock index S & P 500. The most successful fund managers on Wall Street not known. Buffett thus became the third richest man in the world and made the early shareholders of his investment company Berkshire Hathaway millionaires.
A successful career in the financial sector seemed prefigured. For Buffett comes from financially sound and fair, even though he bore it as a child newspapers or helping out at the grocery store of his grandfather. Buffett’s father was Broker, an independent investment adviser for securities had chosen a university degree and was four times as a delegate in the US House of Representatives. Thus the family Buffett was clear to the upper middle class of the rural state of Nebraska.
The investment performance of a man with a socio-economic background as Buffett is nevertheless unusual. According to a recent academic study cut fund managers who come from a wealthy home, namely a total significantly worse than colleagues who have grown up in poverty. The reason: “managers who were born poor are faced in the asset management industry with greater barriers to entry, and only the most qualified to succeed”, write Oleg Chuprinin from the Australian University of New South Wales and Denis Sosyura by the US University of Michigan. ” / p>
According to would rather promoted rich-born fund manager. Competitors from poor contrast would only continue if they made more. In other words, who comes from a rich family, benefiting from its inherited status, the existing assets, the good education in private schools and universities and the resulting professional networks. Who on the other hand has to bite it in bad public schools and relies on grants, must soon perform at their best in order to even get a career opportunity.
The most investigated in the study fund managers came as expected from wealthier and educated classes. The average income of the fathers were almost at the top tenth of the general income distribution of the US population. The fathers proceeded to hold the University, and the houses of the parents were often worth much more than other properties in the same region.
“Familial Appearance as a signal of quality management”
The result of the study was nevertheless disappointing for the offspring of this elite. The results obtained by fund managers from the wealthiest fifth were based on the alpha factor to more than 2 percentage points in the year under which the poorest fifth. Alpha measures the excess or short return on an investment relative to a reference value.
For the 51-page study titled “Familial Appearance as a signal of quality management: documents of investment funds” the two researchers examined data American fund manager from 1975 to 2012, including their education and career steps. These data, derived from various information services such as Morningstar, were eventually supplemented with information on the family background of the manager of every ten-yearly US Census. This includes the financial income of the family, the value of the parental home, parents’ education, all information, determine the social and economic status.
Since personal data are published from the census in 72 years, came the latest information from the census of 1940. Therefore, the study is limited to fund managers, who were born before 1946th That may seem outdated, but still well Buffett vintage 1930. is ultimately came 267 fund managers for the study in question, each of which was solely responsible for 482 individual mutual funds. Analyzes also were only equity funds that managed more than $ 10 million over the period of the study.
The study could retail investors who do not want to humble Fund that simply track an index, to provide assistance in the selection of fund managers. However, there is the problem that information on the family background of fund managers are generally not known. So there are, apart from their education and their careers, even little personal information about the two former hedge fund manager Todd Combs and Ted Weschler, Buffett will succeed as chief investor of Berkshire Hathaway.
About the childhood home of the two and also of most other fund managers is not publicly known. But maybe this will change if the study of Chuprinin and Sosyura abuts on Wall Street on interest. Then the marketers of fund companies may no longer advertise only with the returns of the past, the plan anyway no success in the future. Perhaps is the CV of singulated fund managers eventually not only the completion of an elite university, but also “born in the Bronx”.