Repetita Iuvant: Mutual Fund Performance During the COVID Pandemic

Do fund managers learn about salient risks? To address this issue, we explore whether managers' exposure to prior disease outbreaks might affect their fund performance during COVID-19. Using data on US equity fund managers, we find that H1N1 funds with managers exposed to the influenza A disease in 2009 (H1N1) generate superior returns during the 2020 COVID-19 crisis compared to other funds. A possible explanation is that H1N1 funds use less human-interaction-based information after H1N1 exposure so that their performance is less affected by the lockdowns that prevented social interaction during the COVID-19 pandemic. Conversely, we do not find that they have changed their exposure through the domestic holdings of firms with international supply chains after H1N1. Overall, our findings support the view that managers' professional experience may affect investment style and explain superior performance for funds with managers exposed to similar exogenous experiences throughout their careers.