Outsized investment returns are often attributed to a fund manager’s skill, analytics, or specialized expertise. But there might be a less obvious advantage: a successful spouse.
Managers with spouses in corporate executive suites generate monthly gross returns that are as much as 0.3% more than those with non-executive spouses, according to research by Harvard Business School Professor Lauren H. Cohen. While people are forbidden by federal law from trading on their spouse’s insider information, partners can provide valuable industry intelligence or context that would be hard to get otherwise.
“Look, if your spouse works at Microsoft, you can’t trade Microsoft. So that’s fine,” says Cohen, the L.E. Simmons Professor of Business Administration. “But that doesn’t mean your spouse may not have really good insight on Apple or Intel or other members of the industry.”
Look, if your spouse works at Microsoft, you can’t trade Microsoft ... But that doesn’t mean your spouse may not have really good insight on Apple or Intel.
A “marriage market” edge might seem especially appealing at a time when inflows to low-cost index funds are outstripping contributions to traditional, actively managed mutual funds. Emerging talk of artificial intelligence’s potential to replicate trading strategies might prompt some managers to tap the expertise closest to them.
Cohen details his findings in the March working paper "Dinner Table Alphas," coauthored with Sean Cao and Huaizhi Chen, professors at the University of Maryland and the University of Texas at Dallas, respectively; and Tianchen (Hugo) Zhao, a doctoral candidate at the University of Maryland.
Finding fund managers’ high-powered spouses
The researchers created a comprehensive dataset that connects 1,656 US mutual fund managers to their 4,175 household members. The researchers used LinkedIn data from Revelio Labs to trace their careers from 2003 to 2022, enabling them to isolate the effect of spousal ties.
To understand how those connections might have enhanced trading decisions and performance, the researchers mined data from Morningstar, Thomson Reuters, and Capital IQ.
After categorizing funds based on their spousal ties, the team aggregated funds with similar characteristics to replicate their portfolios and compare them more reliably. They analyzed excess returns generated from stocks bought and sold, segmenting the trades based on whether a stock was in the same industry as a spouse’s employer.
Compared with fund managers without executive spouses, managers married to senior leaders earn monthly gross returns of up to 0.32% higher.
Gaining from a spouse’s insights
The researchers found that the presence of a spouse in an executive or C-suite position, rather than a mid-level role, significantly predicts strong investment performance. This “alpha” generation is not merely correlated with the spouse's success; it’s directly tied to the fund managers’ ability to translate industry knowledge—emerging trends, competitive shifts, and outlook changes—into profitable stock picks, according to the study.
Spousal knowledge benefited managers by:
Improving trades in the spouse’s industry
Outperformance is almost entirely concentrated in trades of stocks operating within the same industry as the spouse’s employer. While managers generated positive returns on trades outside the spouse’s industry, their trades within it were disproportionately more profitable.
So, if you do the long-short, that’s getting nearly 10% per quarter. That’s roughly 40% per year—huge, huge numbers.
“It’s not that this mutual fund manager is amazing at all her trades, but only on those trades in her spouse’s industry,” Cohen says.
In fact, managers with high-powered spouses tend to “tilt their portfolios toward these spouse-related industries and earn higher returns on such trades,” the paper says.
Bolstering long-short strategies even more
Funds with a marital edge yield statistically significant advantage on both positive and negative information.
“It turns out your buy and sell positions both outperform massively—on the order of nearly 6% per quarter on the buy and 4% on the sell,” Cohen says. “So, if you do the long-short, that’s getting nearly 10% per quarter. That’s roughly 40% per year—huge, huge numbers.”
Helping managers forecast material events
The findings suggest that these household connections act as "private channels” that are superior to those available in the broader public market, according to the authors. Being able to talk shop with a spouse over dinner also serves as a highly effective filter for market signals, helping managers anticipate:
Earnings surprises. Stock buying among executive-spouse-linked managers typically increases before a company announces better-than-expected earnings.
Corporate distress and opportunity. Buying by these managers tends to rise ahead of favorable events, while a selling surge often portends adverse events, such as asset impairments, downsizing announcements, or CEO turnovers.
It’s family dinner, not insider trading
The findings are not evidence of anything illegal, according to Cohen. A fund manager chatting with their spouse over a meal or while watching a movie is “just getting a better understanding of this industry because of the proximity, because they’re hearing about it.”
Cohen says such domestic discovery probably can’t—and shouldn’t—be regulated.
“Imagine if I were to say that you can’t trade in your spouse’s industry, and it turns out that your sister also works as a CEO … and you can’t trade that industry either,” he says. “Or you have a brother or a cousin or a friend. Eventually, you have no stocks you can trade. That’s crazy. That would never work.”
Such talk, whether over dinner with a family member or cocktails with a client or new acquaintance at a conference, is a normal part of the information-gathering process, he adds.
Even celebrated stock pickers like Warren Buffett and Bill Ackman, “how do they find information? They go out and get it.”
Image by Ariana Cohen-Halberstam, created with assets from AdobeStock.
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