Does air quality matter for mutual funds' tracking errors? : a thesis presented in partial fulfilment of the requirements for the degree of Master of Business Studies in Finance at Massey University, Auckland, New Zealand
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Date
2019
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Open Access Location
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Massey University
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Abstract
Social science literature documents that air quality affects the cognitive dissonance of market
participants including retail investors. In this paper, we examine the effect of air pollution on
professional investors: mutual fund managers. We find air pollution affects managers’ cognitive
performance and behaviour bias, resulting in higher funds’ tracking errors. In addition, we
identify factors, which can improve fund managers’ cognitive abilities, reducing the impact of air
pollution.
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Keywords
Mutual funds, China, Management, Investment advisors, Health and hygiene, Air quality, Health aspects, Cognition, air pollution, tracking error, mutual funds, cognitive biases, managers' behavioural biases, professional investors