Several hundred individuals who hold a Ph.D. in economics, finance, or others fields work for institutional money management companies. The gross performance of domestic equity investment products managed by individuals with a Ph.D. (Ph.D. products) is superior to the performance of non-Ph.D. products matched by objective, size, and past performance for one-year returns, Sharpe Ratios, alphas, information ratios, and the manipulation-proof measure MPPM. Fees for Ph.D. products are lower than those for non-Ph.D. products. Investment flows to Ph.D. products substantially exceed the flows to the matched non-Ph.D. products. Ph.D.s’ publications in leading economics and finance journals further enhance the performance gap.
Chaudhuri, Ranadeb and Ivkovich, Zoran and Pollet, Joshua Matthew and Trzcinka, Charles, What a Difference a Ph.D. Makes: More than Three Little Letters (October 15, 2013). Available at SSRN: http://ssrn.com/abstract=2344938
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