The real effect of sociopolitical racial animus: Mutual fund manager performance during the AAPI Hate

Using the recent AAPI Hate around 2020-2021 as an exogenous shock, we show that sociopolitical racial animus impairs the performance of mutual funds managed by at least one Asian female manager, the most targeted group by the Hate-induced violence. The decline in performance is greater in states with higher levels of anti-Asian animus, when the portfolio is more actively managed, has an aggressive investment objective, or when the Asian female manager plays a more influential role in fund management. The poor fund performance is not attributed to fund investors' redemption, low managerial quality, increased childcare burden, concerns for the pandemic situation of family members in home countries, or solely workplace discrimination. Placebo tests show that the same performance decline is absent among funds managed by non-Asian-looking minority and index funds. Taken together, the evidence is consistent with perceived vulnerability to the AAPI Hate crimes inducing distraction and stress and leading to impaired performance. Corroborating this view, we only find some limited evidence in a subset of Asian male managers that they suffer from a performance decline when they are based in states with higher levels of anti-Asian animus. Our study contributes to the scarce evidence on the impact of sociopolitical racial animus on productivity and explores racial animus beyond the workplace and marketplace.