Mutual fund flows: Where does the money go?

Harlan Platt, Licheng Cai, Marjorie Platt

Abstract


We examine three broad mutual fund sectors: equities, fixed income, and money market funds, to ascertain whether fund flows explain investment returns or whether investment returns attract funds. This question has been studied before but for the most part, research results have not been intuitive. Our findings are substantially different from the results of previous studies. We believe that our results are intuitively more obvious. We fail to reject both causal hypotheses. That is, we find that investment returns are affected by funds flows and that funds flows towards high returns.


Keywords


G110; G120; G140.

Full Text:

PDF

References


Investment company fact book: a review of trends and activities in the U.S. Investment Company industry, Investment Company Institute, 53rd Edition.

Bensen, K., Faff R., and Smith T., 2010. The simultaneous relation between fund flows and returns. Australian Journal of Management, 35(5): 51 – 67. http://dx.doi.org/10.1177/0312896209354217

Cashman G., Nardari F., Deli D., and Villupuram S., 2012. Investor Behavior in the Mutual Fund Industry: Evidence from Gross Flows. Journal of Economics and Finance, April. 1 – 23.

Ippolito, R., 1992. Consumer reaction to measures of poor quality: Evidence from the mutual fund industry. Journal of Law & Economics, XXXV: 45 -70. http://dx.doi.org/10.1086/467244

Norris, F., 2013. Younger households are slower to make gains in net worth. The New York Times, June 14, B3.

Remolona, E., Kleiman P., and Gruenstein, D., 1997. Market returns and mutual fund flows. FRBNY Economic Policy Review, 33 – 52.

Warther, V., 1995. Aggregate mutual fund flows and security returns. Journal of Financial Economics, 39: 209-235. http://dx.doi.org/10.1016/0304-405X(95)00827-2




DOI: http://dx.doi.org/10.18533/jefs.v2i05.146

Article Metrics

Metrics Loading ...

Metrics powered by PLOS ALM

Refbacks

  • There are currently no refbacks.
';



Copyright (c) 2014 Harlan Platt, Licheng Cai, Marjorie Platt

.............................................................................................................................

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

.............................................................................................................................

If you find difficulties in submitting manuscript please forward your doc file to support@journalofeconomics.org. Our support team will assist you in submission process and other technical matters. Please note that documents uploaded by yourself are reviewed more quickly than replies by e-mail.

In order to get notifications on inbox please add  this domain journalofeconomics.org in your email safe list.

.............................................................

ISSN 2379-9463(Print)
ISSN 2379-9471(Online)

...........................................................