Title

Investors Do Respond to Poor Mutual Fund Performance: Evidence from Inflows and Outflows

Document Type

Article

Language

eng

Publication Date

11-2012

Publisher

Wiley

Source Publication

Financial Review

Source ISSN

0732-8516

Abstract

Abstract

We examine the relation between mutual fund performance and gross flows for a large sample of actively managed U.S. mutual funds. Unlike previous studies that have only examined periods of generally increasing net flows, our sample includes periods of both increasing and decreasing net flows. We find that outflows are related to performance, with investors withdrawing money from poor performers. We also find that outflows and inflows respond asymmetrically to performance, outflows increase more aggressively following poor performance, and inflows increase more aggressively following good performance. Additionally, we find a symmetric performance net flow relation.

Comments

The Financial Review, Vol 47, No. 4 (November 2012): 719-739. DOI. © 2012 John Wiley & Sons, Inc. Used with permission.

George D. Cashman was affiliated with Texas Tech University at the time of publication.

Share

COinS