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Financial consequences of mutual fund mergers

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  • Laura Andreu
  • José Luis Sarto

Abstract

This study examines the impact of mutual fund mergers on performance and investment flows of target and acquiring funds. Results indicate some improvements in the post-merger performance for target funds shareholders. Results also confirm prior evidence of negative net asset flows in target funds in the pre-merger period as well as negative, but not significant, net asset flows in the years following the merger. However, a more detailed analysis allows us to observe that this lack of significance in the negative reaction of investors to mutual fund mergers is explained by the compensation of abnormally high inflows and outflows in the resultant funds. These substantial flows are significantly above the average in their market segment, especially regarding money flows. This finding provides evidence that investors pay attention to mutual fund mergers, especially institutional investors who are concentrated on the market possibilities resulting from these organizational processes.

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  • Laura Andreu & José Luis Sarto, 2016. "Financial consequences of mutual fund mergers," The European Journal of Finance, Taylor & Francis Journals, vol. 22(7), pages 529-550, May.
    • Handle: RePEc:taf:eurjfi:v:22:y:2016:i:7:p:529-550
    DOI: 10.1080/1351847X.2013.858055
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    Cited by:

    1. Laura Fabregat-Aibar & Maria-Teresa Sorrosal-Forradellas & Glòria Barberà-Mariné & Antonio Terceño, 2021. "Can Artificial Neural Networks Predict the Survival Capacity of Mutual Funds? Evidence from Spain," Mathematics, MDPI, vol. 9(6), pages 1-10, March.

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