Common Ownership Network and Mutual Fund Performance

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Using quarterly ownership data, I construct a network of actively managed U.S. domestic
equity mutual funds. Cross-fund portfolio similarities are measured as the importance of
each fund within the network. Empirically, I show that deviations from a common portfolio
is associated with higher performance, conditional on fund characteristics. Theoretically, the
trade-off between portfolio similarity and performance is consistent with a simple decision-
making problem with negative network externalities.

Author(s):

Shema Mitali    
Warwick Business School - University of Warwick
United Kingdom