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Mutual Fund Growth in Standard and Specialist Market Segments

  • Stefan Ruenzi

    (Dpeartment of Finance, University of Cologne)

We examine differences in the performance flow relationship (PFR) between different segments of the fund industry. Such differences can be caused by distinct mutual fund investors’ characteristics in different segments. In our empirical study of the US equity mutual fund industry in 1993-2001, we find a much more convex PFR in standard segments than in specialist segments. Furthermore, our results suggest that investors in the latter are more fee- and risk-aware than investors in standard segments. Overall, these results hint at investors in specialist segments being more sophisticated than investors in standard segments. Our results should have serious implications for the management of investment companies and for the behavior of fund managers.

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File URL: http://128.118.178.162/eps/fin/papers/0406/0406005.pdf
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Paper provided by EconWPA in its series Finance with number 0406005.

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Length: 23 pages
Date of creation: 14 Jun 2004
Date of revision: 27 Jun 2004
Handle: RePEc:wpa:wuwpfi:0406005
Note: Type of Document - pdf; pages: 23
Contact details of provider: Web page: http://128.118.178.162

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  1. Alexander Kempf & Stefan Ruenzi, 2004. "Family Matters: The Performance Flow Relationship in the Mutual Fund Industry," Finance 0404012, EconWPA, revised 26 May 2004.
  2. Bergstresser, Daniel & Poterba, James, 2002. "Do after-tax returns affect mutual fund inflows?," Journal of Financial Economics, Elsevier, vol. 63(3), pages 381-414, March.
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  8. Glaser, Markus & Langer, Thomas & Weber, Martin, 2003. "On the trend recognition and forecasting ability of professional traders," Sonderforschungsbereich 504 Publications 03-06, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
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  12. Robert J. Shiller, 1984. "Stock Prices and Social Dynamics," Cowles Foundation Discussion Papers 719R, Cowles Foundation for Research in Economics, Yale University.
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  17. Fant, L Franklin & O'Neal, Edward S, 2000. "Temporal Changes in the Determinants of Mutual Fund Flows," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 23(3), pages 353-71, Fall.
  18. Chevalier, Judith & Ellison, Glenn, 1997. "Risk Taking by Mutual Funds as a Response to Incentives," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1167-1200, December.
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  24. L. Franklin Fant & Edward S. O'Neal, 2000. "Temporal Changes In The Determinants Of Mutual Fund Flows," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 23(3), pages 353-371, 09.
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