{"title":"Interplay Between Competition Networks, Strategy Uniqueness, and Hedge Fund Performance","authors":"Maher Kooli, Min Zhang","doi":"10.1111/fmii.70001","DOIUrl":null,"url":null,"abstract":"<p>This study investigates the effect of competition networks among hedge fund managers on strategy distinctiveness and fund performance. Using a sample of 2711 US-based hedge funds from the Lipper TASS database between 1994 and 2018, we construct a hedge fund competition network (HFCN) based on alumni and employment ties derived from LinkedIn profiles. We find that greater centrality in the HFCN, indicating closer proximity to peer competitors, is associated with lower abnormal performance. This effect is partially mediated by a decline in strategy distinctiveness, measured by the Strategy Distinctiveness Index (SDI). Funds with stronger network ties tend to exhibit greater return similarity with peers, suggesting that social proximity encourages strategic conformity. The results are robust across performance metrics, style classifications, and subsamples and are particularly pronounced among managers with strong cognitive profiles.</p>","PeriodicalId":39670,"journal":{"name":"Financial Markets, Institutions and Instruments","volume":"34 4","pages":"173-195"},"PeriodicalIF":0.0000,"publicationDate":"2025-07-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/fmii.70001","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Financial Markets, Institutions and Instruments","FirstCategoryId":"1085","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/fmii.70001","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"Economics, Econometrics and Finance","Score":null,"Total":0}
引用次数: 0
Abstract
This study investigates the effect of competition networks among hedge fund managers on strategy distinctiveness and fund performance. Using a sample of 2711 US-based hedge funds from the Lipper TASS database between 1994 and 2018, we construct a hedge fund competition network (HFCN) based on alumni and employment ties derived from LinkedIn profiles. We find that greater centrality in the HFCN, indicating closer proximity to peer competitors, is associated with lower abnormal performance. This effect is partially mediated by a decline in strategy distinctiveness, measured by the Strategy Distinctiveness Index (SDI). Funds with stronger network ties tend to exhibit greater return similarity with peers, suggesting that social proximity encourages strategic conformity. The results are robust across performance metrics, style classifications, and subsamples and are particularly pronounced among managers with strong cognitive profiles.
期刊介绍：
Financial Markets, Institutions and Instruments bridges the gap between the academic and professional finance communities. With contributions from leading academics, as well as practitioners from organizations such as the SEC and the Federal Reserve, the journal is equally relevant to both groups. Each issue is devoted to a single topic, which is examined in depth, and a special fifth issue is published annually highlighting the most significant developments in money and banking, derivative securities, corporate finance, and fixed-income securities.
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