tailieunhanh - The Small World of Investing: Board Connections and Mutual Fund Returns

Now that you have a list of attractive securities from the credit analysts and a list of available securities from the traders, you’ll need to combine them into a portfolio. One of your first decisions will be about the maturities you’d like to buy. Remember that Rule 2a-7 limits money market funds to securities with maturities of 397 days or less. If you invest the entire fund at 397 days, you’d almost definitely have the best-yielding fund in the market, but you wouldn’t be complying with Rule 2a-7. (Remember the 60-day limit on average maturity!) Moving all the holdings to a 60-day maturity would meet the SEC average maturity. | The Small World of Investing Board Connections and Mutual Fund Returns Lauren Cohen Harvard University and National Bureau of Economic Research Andrea Frazzini University of Chicago and National Bureau of Economic Research Christopher Malloy Harvard University This paper uses social networks to identify information transfer in security markets. We focus on connections between mutual fund managers and corporate board members via shared education networks. We find that portfolio managers place larger bets on connected firms and perform significantly better on these holdings relative to their We would like to thank Malcolm Baker Nick Barberis John Campbell Judy Chevalier Jennifer Conrad Kent Daniel Will Goetzmann Steve Kaplan Owen Lamont Steve Levitt Alexander Ljungqvist Toby Moskowitz Fiona Scott Morton Ludovic Phalippou Adam Reed Bob Shiller Clemens Sialm Jeremy Stein Tuomo Vuolteenaho Mike Weisbach two anonymous referees and an anonymous editor and seminar participants at the University of Chicago Yale University London Business School Wharton Harvard University University of Florida University of Amsterdam University of Illinois Erasmus Universiteit Rotterdam University of Oregon Swedish Institute for Financial Research NBER 2007 Asset Pricing Mini Conference at Washington University 2007 European Finance Association meetings in Ljubljana 2008 American Finance Association Ameetings in New Orleans Arrowstreet Capital Morgan Stanley Old Mutual Asset Managers Applied Quantitative Research Capital Management and Goldman Sachs Asset Management for helpful comments. We also thank Nick Kennedy Stephen Wilson Laura Dutson Matthew Healey Meng Ning Courtney Stone and Bennett Surajat for excellent research assistance. We are grateful to BoardEx and Linda Cechova for providing firm board data Morningstar and Annette Larson for providing mutual fund data and to the Chicago Graduate School of Business Initiative on Global Markets for financial support. Journal of Political .