Sentimental Mutual Fund Flows

56 Pages Posted: 27 Oct 2013 Last revised: 21 Jun 2019

See all articles by George J. Jiang

George J. Jiang

Washington State University

H. Zafer Yuksel

Texas A&M University Corpus Christi

Date Written: June 20, 2019

Abstract

We show that many stylized empirical patterns for mutual fund flows are driven by investor sentiment. Specifically, when sentiment is high, investors exhibit a stronger tendency of chasing past fund performance; fund flows are less sensitive to fund expenses; and investors are attracted more to funds with sheer visibility. Moreover, the well-documented positive relation between fund flows and future fund performance is significant only during high sentiment periods and is mainly driven by expected component of fund flows. Finally, we show that mutual fund investors exhibit a significantly negative timing ability at the individual fund level when sentiment is high.

Keywords: Mutual fund flows; Investor sentiment; Fund performance; Fund expenses; Fund visibility; Flow-performance relation; Investor timing ability

JEL Classification: G11, G02, G23

Suggested Citation

Jiang, George and Yuksel, H. Zafer, Sentimental Mutual Fund Flows (June 20, 2019). Available at SSRN: https://ssrn.com/abstract=2345381 or http://dx.doi.org/10.2139/ssrn.2345381

George Jiang

Washington State University ( email )

Department of Finance and Management Science
Carson College of Business
Pullman, WA 99-4746164
United States
509-3354474 (Phone)

HOME PAGE: http://directory.business.wsu.edu/bio.html?username=george.jiang

H. Zafer Yuksel (Contact Author)

Texas A&M University Corpus Christi ( email )

6300 ocean drive
corpus christi, TX TX 78414
United States

HOME PAGE: http://https://cob.tamucc.edu/About_Us/faculty_staff_directory.html

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