zwitserlanden
Next time, ask your fund manager what kind of car they drive

Next time, ask your fund manager what kind of car they drive

13-12-2017 | From the field
Tell me what car you drive and I will tell you who you are. This paper 1 states that hedge fund managers who own powerful sports cars are willing to take on more investment risk, and that, conversely, managers who own practical but unexciting cars are less willing to take on investment risk. It also finds that the incremental risk assumed by sports car buyers is not associated with higher returns.
  • David Blitz
    David
    Blitz
    Head of Quant Research

Consequently, these managers deliver lower Sharpe ratios than their peers. In addition, sports car owners were found to be more likely to terminate their funds and engage in fraudulent behavior. The authors consider several alternative explanations and conclude that the revealed preference of managers in the automobile market provides evidence of the personality trait of sensation seeking, which in turn drives their behavior in the investment arena.

Our clients do not need to be worried about these findings, as Volvo and Volkswagen are the most popular car brands among Robeco’s quant fund managers and analysts.

Stay informed on Quant investing with monthly mail updates
Stay informed on Quant investing with monthly mail updates
Subscribe
1Brown, Lu, Ray & Teo, “ Sensation Seeking, Sports Cars, and Hedge Funds”, SSRN working paper no. 2882983
From the field
From the field

Our researchers publish many whitepapers based on their own empirical studies; they also follow quantitative research done by others.

Read all articles
Subjects related to this article are:

Important legal information

The content displayed on this website is exclusively directed at qualified investors, as defined in the swiss collective investment schemes act of 23 june 2006 ("cisa") and its implementing ordinance, or at “independent asset managers” which meet additional requirements as set out below. Qualified investors are in particular regulated financial intermediaries such as banks, securities dealers, fund management companies and asset managers of collective investment schemes and central banks, regulated insurance companies, public entities and retirement benefits institutions with professional treasury or companies with professional treasury.

The contents, however, are not intended for non-qualified investors. By clicking "I agree" below, you confirm and acknowledge that you act in your capacity as qualified investor pursuant to CISA or as an “independent asset manager” who meets the additional requirements set out hereafter. In the event that you are an "independent asset manager" who meets all the requirements set out in Art. 3 para. 2 let. c) CISA in conjunction with Art. 3 CISO, by clicking "I Agree" below you confirm that you will use the content of this website only for those of your clients which are qualified investors pursuant to CISA.

Representative in Switzerland of the foreign funds registered with the Swiss Financial Market Supervisory Authority ("FINMA") for distribution in or from Switzerland to non-qualified investors is Robeco Switzerland AG, Josefstrasse 218, 8005 Zürich, and the paying agent is UBS Switzerland AG, Bahnhofstrasse 45, 8001 Zürich. Please consult www.finma.ch for a list of FINMA registered funds.

Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco/Robeco Switzerland AG product should only be made after reading the related legal documents such as management regulations, articles of association, prospectuses, key investor information documents and annual and semi-annual reports, which can be all be obtained free of charge at this website, at the registered seat of the representative in Switzerland, as well as at the Robeco/Robeco Switzerland AG offices in each country where Robeco has a presence. In respect of the funds distributed in Switzerland, the place of performance and jurisdiction is the registered office of the representative in Switzerland.

This website is not directed to any person in any jurisdiction where, by reason of that person's nationality, residence or otherwise, the publication or availability of this website is prohibited. Persons in respect of whom such prohibitions apply must not access this website.

I Disagree