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Fund family versus mutual fund performance: evidence from the Indian investors’ perspective

Author

Listed:
  • Yogesh Chauhan

    (Indian Institute of Management Raipur)

  • Ajay Kumar Mishra

    (IIT Kharagpur)

  • Bhavik Parikh

    (St. Francis Xavier University)

Abstract

We evaluate investors' learning from past fund performance and subsequent capital allocation decisions in mutual funds in an emerging market setup. We find that investors in India learn more about funds' ability to generate excess returns from past funds’-family performances. We explore two possible channels, common skill effect and negative correlation effects, through which investors observe fund-family performance and its impact on future fund flows. We observe that fund-family performance dominates individual fund performance when the common skill effect is stronger than the negative correlation effect. Our findings suggest that investors can use fund-family resources to understand funds' alpha-generating skills. Overall, our result highlights the new learning perspective of Indian fund investors.

Suggested Citation

  • Yogesh Chauhan & Ajay Kumar Mishra & Bhavik Parikh, 2023. "Fund family versus mutual fund performance: evidence from the Indian investors’ perspective," Journal of Asset Management, Palgrave Macmillan, vol. 24(4), pages 268-283, July.
    • Handle: RePEc:pal:assmgt:v:24:y:2023:i:4:d:10.1057_s41260-022-00301-0
    DOI: 10.1057/s41260-022-00301-0
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    References listed on IDEAS

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    More about this item

    Keywords

    Mutual fund flows; Flow-performance sensitivity; Family fund; The cross-fund learning;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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