Fund manager replacement performance persistence

Abstract: This thesis will focus on the relation between funds’ performance and the fund managers. Since there is reason to assume that the manager personally brings an effect to performance, there should also be reason to suspect that a replacement of this manager ought to change the performance of the fund. The purpose of this thesis is to examine whether the replacement of a fund manager affects the funds’ performance. The topic is approached using event studies comparing the Jensen’s alpha, a risk-adjusted performance measure, of funds before and after the replacement of the funds’ manager. The study results indicate that a poorly performing fund is likely to experience a significant performance increase while there is no statistically significant support for an observed decrease in performance when well-performing funds experience manager replacement.