Face-to-face or face on screen: social interactions and mutual fund trading

Abstract We examine how in-person and virtual interactions shape mutual fund investment decisions using a comprehensive dataset of corporate site visits. Before COVID-19, fund pairs jointly attending in-person visits trade more similarly (by 20 percent of a standard deviation) than matched controls. The effect is present in holdings of stocks unrelated to the hosting firm, and remains robust when aggregated to industry, geographic, and asset-class levels; it is stronger among managers with familiarity, similar seniority, and mixed gender. Stocks purchased by jointly visiting funds earn higher subsequent returns, indicating that these exchanges convey valuable information. Exploiting the exogenous shift to virtual communication during COVID-19, we find in-person visits remain associated with correlated trading, whereas virtual visits have weaker effects. A survey of fund managers confirms that visits prompt information exchange, follow-up research, and portfolio adjustments. In-person interactions appear central to information acquisition, and virtual interactions do not easily replicate this function.