This paper examines whether the fund concentration is driven by informational advantage or managers’ overconfidence, and, furthermore, the determinants that force fund managers to hold concentrated funds. Comparing the performance between diversified funds and focused funds, we find that concentrated funds are induced by overconfident behavior of managers. To analyze what drives managers to hold concentrated funds, we explore self-attribution bias, demographic characteristics of managers, and sharing-the-blame effect. Using a unique and detailed dataset, we find that age and the number of managers are main driving forces behind
fund managers’ overconfidence, suggesting that demographic characteristic and sharing-theblame effect influence fund concentration.
Key words: fund concentration, fund performance, overconfidence, demographic characteristics, sharing-the-blame effect
