We show that the performance of actively managed equity mutual funds increases when portfolios are concentrated in the top one or two stocks within each industry sector. Funds managed by a single manager have much more concentrated portfolios, tend to perform better, and have higher expense ratios than funds managed by multiple managers. We observe that when a fund’s management design is changed from single manager to multiple managers, the portfolio’s within- and cross-sector concentration, performance, and expense ratios decrease.
![Bridge over ocean](/-/media/images/hero/rpc-theme-heros/bridge-default.jpg?w=2560&hash=C67CE44B69F875C23628FEF2E3F26808)