Purchase and Redemption Patterns of US Equity Mutual Funds
AbstractI decompose net flows into purchase and redemption rates for a sample of equity funds. I find a strong relation between purchase rates and redemption rates indicating a significant clientele of rapid fund traders. I also find that investors punish poor performance with higher redemptions. Over my sample period, index funds display lower redemption rates than do actively managed funds. I find that load fund investors base fund-trading decisions on previous performance to a greater extent than do no-load fund investors. This result suggests that investment advisors and brokers play a significant role in increased mutual fund trading activity.
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Bibliographic InfoArticle provided by Financial Management Association in its journal Financial Management.
Volume (Year): 33 (2004)
Issue (Month): 1 (Spring)
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- Fang, Jieyan & Ruenzi, Stefan, 2009. "Rapid Trading bei deutschen Aktienfonds: Evidenz aus einer großen deutschen Fondsgesellschaft," CFR Working Papers 09-04, University of Cologne, Centre for Financial Research (CFR).
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