Different Minds, Better Returns? Investigating Diversity and Fund Performance in the Swedish Mutual Fund Market

Sammanfattning

Four easily observable characteristics - gender, university, academic major, and prior workplace - capture key differences in fund performance among Swedish mutual fund management teams. Using a panel dataset of Swedish actively managed equity funds, we compute team-level diversity scores and regress them on alpha and value added measures. We find that the relationship between team diversity and fund performance is dimension specific and sensitive to model specification. Diversity in academic majors emerges as the most statistically and economically significant predictor of superior fund performance. In contrast, teams whose managers attended differentiated universities underperform their homogeneous counterparts in terms of abnormal returns. In cross-sectional analyses, we find that gender diversity is negatively associated with fund performance, while workplace diversity shows no consistent effect on financial outcomes. These findings highlight that not all dimensions of diversity contribute equally to fund performance, with implications for fund selection and team composition.