Writing in an HKU Business School paper (HKU Jockey Club Enterprise Sustainability Global Research Institute Paper Series) Marcin T. Kacperczyk of Imperial College London (et al.) set out test whether or not extemporaneous live streaming interviews of fund managers make any difference in terms of assets subsequently flowing into their funds.
There’s a large body of work on how company manager tone, in results announcements and written communication, illuminates but the authors of this study believe it may be a first in analyzing how fund managers’ appearance affects flows into their funds.
The study concentrates on China and ETFs where 90% of fund houses conduct regular live streaming sessions. Visual, vocal and verbal content is then parsed to create an Effective Delivery Index (EDI). With this is hand it’s then a relatively simple matter of correlating this EDI score to subsequent fund flows (ETFs specifically are studied because flow is more dynamic providing greater granularity in terms of data points).
The key takeaway for practitioners is that its facial expression (of the upbeat/happy/positive kind) that’s the most important component driving the EDI which does in fact lead to a bump in fund flow following live streams. The longer a manager is on the bigger the impact and broadcasts in the afternoon seem also to be more effective.
Although fund flows increase there’s no correlation between a strong ADI reading and subsequent fund performance. I.e. the investor moves are driven by sentiment not a logical response to useful information
I found the methodology fascinating but I have some reservations . I wonder: can this result be replicated elsewhere? The study was in China, is there a cultural bias at work? If the results are valid can the managers be groomed for better bias?
The work is interesting though and worth noting for anyone who’s job entails messaging via any broadcast media.
You can read the paper in full via the following link Emotions and Fund Flows.
Happy Sunday.