Mutual fund flows: Where does the money go?

Authors

  • Harlan Platt Northeastern University, Boston.
  • Licheng Cai Currensee Global Inc, Boston, MA.
  • Marjorie Platt Northeastern University, Boston, MA.

DOI:

https://doi.org/10.18533/jefs.v2i05.146

Keywords:

G110, G120, G140.

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.

References

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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.

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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

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Published

2014-10-28

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Section

Articles