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The Telling Trades of Mutual Funds

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  • Gina Nicolosi

Abstract

Under the assumption that mutual funds trade at quarter commencement, some funds exhibit and exploit persistent stock selection talent; that is, the stocks purchased consistently outperform the stocks sold, and the higher turnover of these funds indicates that managers are capitalizing on their forecasting abilities. However, any evidence of sustained stock selection skill disappears when alternate trade‐timing assumptions are considered, suggesting that some skilled managers are electing to trade earlier than previously assumed. Overall, the results question the appropriateness of the quarter‐end trading assumption and the validity of existing studies that employ it.

Suggested Citation

  • Gina Nicolosi, 2009. "The Telling Trades of Mutual Funds," Financial Management, Financial Management Association International, vol. 38(4), pages 915-936, December.
    • Handle: RePEc:bla:finmgt:v:38:y:2009:i:4:p:915-936
    DOI: 10.1111/j.1755-053X.2009.01061.x
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    References listed on IDEAS

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    Cited by:

    1. Matallín-Sáez, Juan Carlos, 2015. "A note on market timing: Interim trading and the performance of holdings-based and return-based measures," International Review of Economics & Finance, Elsevier, vol. 35(C), pages 90-99.
    2. Jon A. Fulkerson, 2013. "Is Timing Everything? The Value of Mutual Fund Manager Trades," Financial Management, Financial Management Association International, vol. 42(2), pages 243-261, June.
    3. Shu Lin & Shu Tian & Eliza Wu, 2013. "Emerging Stars and Developed Neighbors: The Effects of Development Imbalance and Political Shocks on Mutual Fund Investments in China," Financial Management, Financial Management Association International, vol. 42(2), pages 339-371, June.

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