Top Management Turnover: An Examination of Portfolio Holdings and Fund Performance

David R. Gallagher, Prashanthi Nadarajah, Matt Pinnuck

Research output: Contribution to journalArticleResearchpeer-review

5 Citations (Scopus)


We examine the performance and portfolio characteristics of actively managed equity funds impacted by top management turnover. Utilizing a unique database of monthly portfolio holdings, our study finds that, post-replacement, previously poor performing funds experience improved returns. However, this improved performance is not attributable to superior stock selection skill. We also find these new managers decrease the fund's reliance on momentum strategies and decrease the portfolio's concentration, which then leads to a reduced tracking-error volatility. Prior to the replacement event, underperforming investment managers exhibit preferences for larger, growth-oriented stocks, as well as riding momentum strategies and increasing portfolio turnover.

Original languageEnglish
Pages (from-to)265-292
Number of pages28
JournalAustralian Journal of Management
Issue number2
Publication statusPublished - Dec 2006
Externally publishedYes


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