Summary
Abstract
Prior research has shown that decisions made at fund family level can account for a substantial portion of the performance of the individual active fund managers in the family. The question then arises whether the average fund performance of some fund families is persistently superior or inferior to that of other fund families. Using gross returns, we find that top-decile family performance persistence is comparable to that of individual funds, suggesting that families do not seem to create conditions to sustain outperformance. After ontrolling for noise in the performance measure, we find that just 3% of fund families overall are truly skilled. Families with higher t-statistics of alpha are much more likely to be truly skilled. Multi-fund families are more likely to be truly unskilled compared to single-fund families. Using net returns however, we find very little evidence of skill.