Performance-Chasing Behavior and Mutual Funds: New Evidence from Multi-Fund Managers
نویسندگان
چکیده
We study managers who manage multiple mutual funds. Consistent with the idea that investors infer ability from past returns, flows into a fund are predicted by the past performance in another fund the multi-fund manager manages. The explanatory power of the other fund is stronger when it performed particularly well, when the two funds have similar styles, and when the manager has started managing a fund recently. Nonetheless, past performance in one fund predicts subsequent performance in the other. It is likely due to some investors’ insufficient withdrawal of capital from a fund when the other fund performed poorly.
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