Political beliefs shape the portfolio choice of institutional investors. After Donald Trump’s surprise 2016 election, Republican fund managers actively increased their portfolio’s equity share by almost 2%, primarily by purchasing stocks sensitive to economic conditions. Partisan beliefs drive these changes – Republican stock analysts differentially increased their earnings forecasts concurrently. We demonstrate that Republican and Democratic-run funds now receive systematically different inflows due to a strong connection between manager partisanship and sustainability ratings. We build a Koijen-Yogo style model of partisan asset demand. Our framework imputes a large effect of partisanship on holdings, but a relatively small effect on prices themselves.

We develop a novel method to infer intra-quarter trading of individual mutual funds. After a mutual fund executes a trade, its reported portfolio return incrementally deviates from its quarter-end-holdings-based return, which allows us to infer the transaction date and amount. We apply our method to studying mutual funds' strategic trading of ESG stocks. In the post-2015 period, mutual funds buy (sell) high- (low-) ESG stocks before quarter ends and reverse their trades shortly after. This trading pattern is the strongest among mutual funds around the cutoff between four- and five-star ESG ratings. These trades also affect the prices of ESG stocks around quarter ends.

We develop a unique dataset, the first-ever of its kind, by leveraging the US Census Bureau’s LEHD program and various big textual data sources, to examine the factors influencing the compensation and career trajectories of US active equity mutual fund managers. We find that managers’ compensation is primarily determined by assets under management (AUM), with return performance directly influencing bonuses beyond its impact on AUM. Despite not aligning with client interests, fund flows significantly affect manager compensation and career outcomes. Large fund outflows increase a manager’s likelihood of job turnover (with a substantial decline in compensation) by 4 percentage points.