Work

The True Colors of Money: Racial Representation and Asset Management

Year: 2026

Type: article

Abstract: We examine the role of race and ethnicity in the mutual fund context at two distinct levels. At the fund manager level, we document a co-racial tilt—funds managed by minority-dominant (White-dominant) teams allocate larger portfolio weights to minority-led (White-led) firms. This tilt is not associated with superior performance. It diminishes as fund managers gain experience, suggesting the presence of inaccurate statistical discrimination. At the investor level, we find that minority-dominant funds are penalized similarly to White-dominant funds for poor performance but are not rewarded as much for superior performance. Overall, our results uncover race-related investment choices at both levels.

Source: Review of Financial Studies

DOI: 10.1093/rfs/hhag038

Authors: Lina Han, Xing Huang, Ohad Kadan, Jimmy Wu

Institutions: University of Massachusetts Amherst, Washington University in St. Louis, Cornell University, Arizona State University, University of Iowa

Language: English

Topic: Financial Markets and Investment Strategies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Reduced inequalities

Open Access status: green

OpenAlex ID: W7155174665

FWCI:

Cites: 52

Cited by: 4

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