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Is the Rating Given to a European Mutual Fund a Good Indicator of Its Future Performance?


  • Vincent Fromentin

    (CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine)

  • Christine Louargant


The objective of this paper is to investigate whether the rating of a fund is a determinant of its future performance. This study focuses on the Fundclass ratings for a sample of 1,452 EU funds with a similar style of management for the period 2003–12 (a period marked by economic crisis). By using the methodology of non-stationary panel data, we simultaneously assess the long- and short-term relationship between fund performance and scoring, using a vector error correction model. Our results conclude that there is a positive relationship between these two variables over time. Nevertheless, in the short term, this relationship is only valid for the period 2007–12, especially for funds with a good rating.
(This abstract was borrowed from another version of this item.)

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  • Vincent Fromentin & Christine Louargant, 2014. "Is the Rating Given to a European Mutual Fund a Good Indicator of Its Future Performance?," Post-Print hal-01369862, HAL.
  • Handle: RePEc:hal:journl:hal-01369862
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    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services


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