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Mutual fund flows: Where does the money go?

Author

Listed:
  • Harlan Platt, Licheng Cai

    (Northeastern University, Boston)

  • Licheng Cai

    (Currensee Global Inc, Boston)

  • Marjorie Platt

    (Northeastern University, Boston)

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.

Suggested Citation

  • Harlan Platt, Licheng Cai & Licheng Cai & Marjorie Platt, 2014. "Mutual fund flows: Where does the money go?," Journal of Economic and Financial Studies (JEFS), LAR Center Press, vol. 2(5), pages 59-69, October.
    • Handle: RePEc:lrc:lareco:v:2:y:2014:i:5:p:59-69
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    More about this item

    Keywords

    Lagged returns; Mutual fund return; Sectoral allocation;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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