Luck or ability among Norwegian mutual fund managers? Empirical analysis of 53 actively managed Norwegian equity funds

Abstract

This paper studies whether mutual fund managers have skill to pick up stocks by applying the measure from Berk and Binsbergen (2013). My sample is 53 actively managed Norwegian equity funds over 10 years, period February 2004 – January 2014. My main findings are that Norwegian actively managed equity funds adds kr.0.35 million per month on average and 71,7% of these funds has an estimated positive value added over sample period. And only 10th decile range, where I had most confidence that the actual value added in the sorting period is positive, has a significant positive performance in measurement horizon and this performance exists as far as 7 year. Therefore, I can conclude that there is evidence of skill among Norwegian mutual fund managers. I find also that investors recognize this skill and reward it by investing more capital with great performance funds.