Research from NYU and Columbia University shows that hedge fund managers that invest in their own funds deliver the best results, according to a recent article in Institutional Investor.

In a paper distributed this month, the researchers report that “insider investment aligns incentives between managers and investors and induces managers to limit the size of their fund, resulting in higher alphas.” The study also shows that when funds raise outside capital, managers are “compensated primarily from managerial fees and leave little value to outside investors.” Funds with no outside capital, the study shows, earned higher excess annual returns (to the tune of 4.3%) compared to those funds with only outside investment.

The authors of the paper, NYU assistant professor Arpit Gupta and Columbia University Ph.D. candidate Kunal Sachdeva, sum up their findings: “Funds which rely more on insider money outperform funds which do not ‘eat their own cooking.'”