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When Your Hedge Fund Manager Buys a Ferrari, Find a New Manager

  • Study shows link between sport car owners, volatile returns
  • Funds more likely to terminate, report fraud, paper finds
A Ferrari California T, back, and 488 GTB sports vehicles sit parked outside of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, Oct. 21, 2015. Ferrari NV climbed as much as 17 percent after its initial public offering, the first step in Fiat Chrysler Automobiles NV's plans to spin off the supercar maker to finance expansion plans.
Photographer: John Taggart/Bloomberg

Maybe David Einhorn was on to something when he bought his Honda Odyssey.

It turns out that the car your hedge fund manager drives says something about his capacity for risk taking -- and his ability to generate market-beating returns. Minivan owners in particular run funds that tend to take on far less risk and exhibit lower volatility than sports-car driving managers, according to a new study by academics Yan Lu, Sugata Ray and Melvyn Teo.