Does family size matter to investors? Evidence from mutual fund flow in Saudi Arabia

Purpose - This study aims to examine the role of fund family size on the money flow of Saudi Arabian open-end equity mutual funds. The author also investigates whether the relationship between fund flow and past return varies based on the fund's family size. Design/methodology/approach - The study analyses 256 equity funds that operated in Saudi Arabia from 2006 until 2017. Pooled and fixed-effect regression models are used to test the relationship between mutual fund flow and family size. Findings - The results indicate that fund flow is higher for large size family funds. The results also show that the relationship between mutual fund flow and past performance is more pronounced for large size families, which supports the concept that investors pay extra attention to funds' return and size. Research limitations/implications - The author provides evidence of the significant effect of family size of mutual funds on future money flow, which helps fund managers to understand investors' motivations for allocating their cash. Originality/value - This paper contributes to the literature by examining the impact of family size level on the interaction between fund flow and past performance. This study is believed to be the first to investigate the family size factor in Saudi Arabia using a comprehensive data set.