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Now this is simply pleasant. From a paper by Chengyu Bai and Shiwen Tian of Shanghai Jiao Tong College (H/T former Alphavillain Tracy Alloway):
We research the connection between inventory fund managers’ facial attractiveness and fund outcomes. Using the state-of-art deep studying method to quantify facial attractiveness, we discover that funds with facial unattractive managers outperform funds with enticing managers by over 2% each year. We subsequent present that handsome managers entice vital increased fund move particularly if the funds can be found on Fintech platforms the place their pictures are accessible to traders. Handsome managers even have higher probability of promotion and have a tendency to maneuver to small corporations. The potential explanations for his or her underperformance embody insufficient means, inadequate effort, overconfidence and inefficient web site visits.
There’s lots to unpack right here. The tl;dr is that Alphaville ought to most likely launch a hedge fund [I’ll stay hot and poor, thanks — Ed]. However you’ll most likely be most curious about how they graded attractiveness.
Right here’s some extra element. Apparently it is best to give all of your cash to the 2 fund managers on the far left.
You could suppose this would possibly simply be a Chinese language phenomenon, or at the very least a phenomenon in much less developed markets relatively than the extra rigorous, quantitative, empirical US or Europe. However this isn’t a wholly new discovering, nor unique to China, even when research elsewhere have principally simply targeted on flows.
Here’s a 2021 paper by Gajanan Ganji of the College of Chicago, Arati Kale of Windfall School and Devendra Kale of the College of Rhode Island that checked out Morningstar’s knowledge for US funds and scraped pictures of their managers’ faces from LinkedIn and their firm’s web sites. They discovered that:
. . . after controlling for fund traits, efficiency measures and supervisor traits, mutual funds managed by ‘enticing’ managers obtain increased fund flows. Our outcomes are strong to matched pattern evaluation, Heckman two-stage choice, alternate mannequin specs. Attractiveness bias is predominantly witnessed inside retail traders and doesn’t entail superior fund efficiency. Our outcomes recommend that mutual fund traders exhibit a bias for seemingly enticing mutual fund managers.
And here’s a 2014 paper by Ankur Pareek of Bucknell College and Roy Zuckerman of Rutgers that checked out hedge fund managers and found that “reliable”-looking ones on common do worse however entice extra investor dosh.
Controlling for past-performance, we find that hedge fund managers whose images are rated as extra reliable are capable of entice higher fund flows, within the medium efficiency vary, and have a much less convex flow-performance relationship in comparison with the managers rated as much less reliable. We additionally find that “reliable” managers usually tend to survive given poor past-performance and generate decrease risk-adjusted returns when in comparison with managers who’re perceived as much less reliable. We attribute this phenomenon to over-investment with “reliable” managers brought on by an investor bias.
Sadly, these different papers didn’t embody pictures of the cash managers that had been rated, so we are able to’t say whether or not or how these surveyed ranked the relative hotness of Invoice Gross, Invoice Ackman, William Danoff, Ken Griffin or Jim Simons.
In the event you are enticing, and now nervous you won’t be suited to cash administration, worry not: your appears is likely to be extra of an asset in analysis!
Here’s a 2019 paper that discovered that handsome analysts made extra correct earnings forecasts and higher short-term inventory picks than their uglier friends, maybe as a result of they get higher entry to administration on the firms they cowl, are extra wanted by traders and get extra assist internally.
We discover that enticing analysts make extra correct earnings forecasts than much less enticing analysts. Furthermore, extra enticing analysts make inventory suggestions which are extra informative within the quick run and extra worthwhile in the long term. Additional analyses reveal that enticing analysts attain their higher job efficiency at the very least partly by way of their privileged entry to info from agency administration. For the sources of the sweetness impact, we discover that extra enticing analysts achieve extra media publicity, have higher connections to institutional traders, and obtain extra inside assist from their employers. Extra proof means that analysts’ bodily look per se at the very least partly explains our findings. General, our research demonstrates that bodily attractiveness has a profound impression on the job efficiency and knowledge entry of sell-side monetary analysts.
This was additionally a China-focused undertaking, however this Journal of Accounting Research paper discovered related outcomes for the US sellside.
Excessive scores for obvious “trustworthiness”, “dominance” and “attractiveness” correlated with higher suggestions — most likely as a result of higher administration entry, seemingly the principle promoting level of analysts nowadays — with just a few fascinating caveats.
Whereas feminine analysts on the entire offered higher forecasts than male analysts, girls that scored excessive on dominance or attractiveness had been on common much less correct than their male counterparts.
There was additionally a stark gender disparity when it got here to inclusion in Institutional Investor’s All-Star rankings:
As institutional purchasers and analyst friends vote on All-Star standing, face impressions might affect choice. According to this concept, we discover a putting gender distinction within the face impression associations: excessive [dominance] will increase All-Star standing probability by 25.4% for male analysts however reduces it by a whopping 67.7% for feminine analysts. The notion of upper masculinity as indicated by a excessive [dominance] rating violates the feminine stereotype, which Oh et al. [2019, 2020] recommend dominant-looking feminine analysts are perceived as much less likable and thus much less more likely to be voted an All-Star. The stark distinction within the [dominance] impact between feminine and male analysts for forecast accuracy and profession outcomes suggests the doable presence of gender discrimination within the monetary analyst labor market.
Which sadly isn’t precisely a shock. Nonetheless, the conclusion from this rising physique of analysis is that ugly beta nerds will inherit the earth.