How Rich are the Parents of Your Money Manager, and What Does it Tell You About his Alpha?

In the last few decades, numerous studies in financial literature have been devoted to the question of “alpha”—that is, the ability of money managers to beat market returns. The main finding is that most asset managers fail to beat the market, and high active management fees are the main culprit. Yet, many investors still choose to give their money to active money managers in the hope that they will beat the market. Researchers at the University of Michigan and the University of New South Wales used a novel dataset to come up with another possible criterion for managers who have […]

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