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Do big data mutual funds outperform?

Author

Listed:
  • Zhang, Junsheng
  • Peng, Zezhi
  • Zeng, Yamin
  • Yang, Haisheng

Abstract

The study aims to empirically evaluate the effectiveness of big data in aiding investors with their decision-making. Our findings indicate that big data funds do not exhibit superior performance compared to their human-managed counterparts. The big data factor utilized in the investment strategies of big data funds does not enhance their stock-selection ability. Additionally, the performance of big data funds is not more persistent than that of traditional funds and is significantly influenced by fund managers’ skills, which shows that big data technology and AI algorithms can not replace fund managers in decisions. Overall, these findings suggest that, thus far, big data technology has not yielded significant improvements in fund performance.

Suggested Citation

  • Zhang, Junsheng & Peng, Zezhi & Zeng, Yamin & Yang, Haisheng, 2023. "Do big data mutual funds outperform?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:intfin:v:88:y:2023:i:c:s1042443123001105
    DOI: 10.1016/j.intfin.2023.101842
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    Keywords

    Big data; Mutual fund performance; Fund manager; Algorithmic trading;
    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
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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