Study claims attractive fund managers underperform

An academic study that claims fund managers who are more physically attractive are likely to underperform in the returns of funds they manage than their plain-looking peers has triggered a debate among finance professionals.

The study, titled "What Beauty Brings? Managers' Attractiveness and Fund Performance," was published on the preprint social sciences research platform SSRN in January and has since been updated several times. The authors, Bai Chengyu and Tian Shiwen of the Shanghai Advanced Institute of Finance at Shanghai Jiao Tong University, used a "state-of-the-art" deep learning model to quantify facial attractiveness and complex mathematical methods to evaluate the links between fund managers' attractiveness scores and their portfolios' performance.

They concluded that funds operated by facially unattractive managers are outperforming those run by attractive counterparts by 2 percent annually. "It is persistently profitable by longing funds whose managers are unattractive while shorting funds whose managers are attractive," they said.

The authors attributed the difference to plain-looking managers' higher ability in stock selecting and market timing, and that good-looking managers exert less effort to their work, are prone to overconfidence, and lack of efficiency during site visits to investigated firms.

The study has drawn mixed reactions from finance professionals. Some have found it to be interesting and thought-provoking, while others have dismissed it as absurd and offensive.

"I read that essay and felt quite confident, but I don't know if I should be happy or sad," a fund manager told Shanghai Securities News.

But many also found the study absurd and thought that such a study was just trying to draw attention through a stunt. "It's unbelievable, I thought this was a joke instead of an academic study," a public funds professional told National Business Daily. "One should care about their equity evaluation styles and concepts if they truly care about their return. To associate managers' appearance with the return, especially using it as a stunt, is not appropriate, as it would sound like a personal abuse."