Graduation Year

2026

Date of Submission

4-2026

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Peter Kelly

Abstract

Whether active fund managers can generate consistent outperformance is one of the central questions in financial economics. While the evidence from US equity markets broadly favors passive strategies, the emerging markets are a different environment, with weaker disclosure standards and more opportunity for mispricing to persist. This paper examines whether the information environment of actively managed emerging market equity funds explains cross-sectional variations in alpha. using a sample of 474 funds drawn from Bloomberg's fund database and evaluated over a three-year alpha measurement period. This paper fills a gap in the active management literature by extending the stock-level analyst coverage mechanism of Hong, Lim, and Stein (2000) to the fund level, an application that has not been empirically tested in the emerging markets context. This study finds that funds concentrated in securities with lower weighted average analyst coverage generate higher three-year annualized alpha, with a coefficient that is negative and significant at the one percent level across all models.

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