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Komfie Manalo, Opalesque Asia:

A study by Marian Moszoro of the Haas School of Business and Michael Bykhovsky of the Center for Open Economics has found that the political ideology of hedge fund managers can have direct correlation with performance.

The study entitled, Political Cognitive Biases Effects on Fund Managers' Performance, said that hedge funds’ performance is affected by whom the managers wanted to win. Specifically, the study has found that Democratic equity hedge managers outperformed their Republican peers by some 72 basis points monthly in the 10 months after Barack Obama won the U.S. presidency in 2008.

Partisan affiliation turns out to be an important bias in the financial industry

The authors of the study said, "Under rational agent hypothesis, financial industry practitioners should not be affected by political discourse, and investors cannot realize abnormal returns on publicly available information. Rare events, however, may silence rationality and potentiate cognitive dissonance on a spectrum of agents. We assembled a comprehensive dataset of hedge fund performance and matched equity hedge fund managers’ political affiliation by their partisan contributions.

We document higher returns of equity hedge funds managed by Democrats for 10 subsequent months — from December 2008 to September 2009. This result is unique and robust to pl......................

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