Do Alpha Males Deliver Alpha? Facial Width-to-Height Ratio and Hedge Funds

Yan Lu and Melvyn Teo

An abundance of evidence relates masculine traits in males to facial width-to-height ratio (fWHR). We show that hedge funds operated by high-fWHR managers underperform those operated by low-fWHR managers, bear greater downside risk, are more susceptible to fire sales, and fail more often. High-fWHR managers compensate for their underperformance by marketing their funds more aggressively, thereby garnering higher flows and fee revenues. By exploiting major personal events that shape testosterone, namely marriage and fatherhood, we trace the biological mechanism underlying the relation between fWHR and investment performance to circulating testosterone. Our findings are robust and extend to equity mutual funds.