Investor reaction to Mutual fund performance: Evidence from UK distribution channels

Keswani, A. & Stolin, D. (2012). Investor reaction to Mutual fund performance: Evidence from UK distribution channels. Journal of Financial Research, 35(3), pp. 425-450. doi: 10.1111/j.1475-6803.2012.01323.x

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Abstract

Existing work on the flow–performance relation in mutual funds focuses on the average U.S. investor, obscuring the contributions of different clienteles. We analyze UK data on monthly fund sales and purchases made via seven distinct distribution channels. We show that there exist marked differences in the reaction to fund performance between different types of retail and institutional investors. These differences can be understood by considering the incentives of parties involved in each channel. Our analysis indicates that the well-documented aggregate net flow–performance convexity in mutual funds is driven by the extreme reaction of retail inflows to favorable performance, particularly from independently advised investors.

Item Type: Article
Additional Information: This is the peer reviewed version of the following article: Keswani, A. and Stolin, D. (2012), INVESTOR REACTION TO MUTUAL FUND PERFORMANCE: EVIDENCE FROM UK DISTRIBUTION CHANNELS. Journal of Financial Research, 35: 425–450., which has been published in final form at http://dx.doi.org/10.1111/j.1475-6803.2012.01323.x. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Uncontrolled Keywords: Mutual funds; investment channels; flow-performance relation
Subjects: H Social Sciences > HG Finance
Divisions: Cass Business School > Faculty of Finance
URI: http://openaccess.city.ac.uk/id/eprint/13636

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