Once a trader, always a trader: The role of traders in fund management

Arbeitspapier

Mutual fund families are increasingly assigning traders to manage corporate bond mutual funds. Using this setting to study the role of traders in investment management, we document that trader managers identify and exploit short-term trading opportunities at lower transaction costs. These skills are particularly valuable during periods of market stress. Moreover, trader managers exhibit sophisticated risk management behavior: They reduce credit risk during periods of market stress and take more maturity risk during periods of large interest rate fluctuations, while holding portfolios with greater convexity. The combination of these skills produces relative outperformance during periods of large interest rate fluctuations.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CFR Working Paper ; No. 24-01

Classification and Topics

• Classification: Wirtschaft ; Portfolio Choice; Investment Decisions ; Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; Human Capital; Skills; Occupational Choice; Labor Productivity
• Subject: traders ; fund managers ; transaction costs ; corporate bonds

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Cici, Gjergji ; Schuster, Philipp ; Weishaupt, Franziska
• Event: Veröffentlichung
• (who): University of Cologne, Centre for Financial Research (CFR)
• (where): Cologne
• (when): 2024

Further information

• Handle: http://hdl.handle.net/10419/283003
• Last update: 10.03.2025, 11:44 AM CET